Ccredit Rrepair and Ddebt Ccollection Ppractices

AUTHOR = John M. Carter

DAGEFORDE PUBLISHER = Dageforde Publishing

Copyright 1995, 2000 by John M. Carter. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of John Carter, 105 5th Avenue West, Benkelman, Nebraska 69021

ISBN 0‑9637515‑4‑9

Library of Congress Number: (forthcoming)

Cover Design By: Angie Johnson Art Productions

Disclaimer

I am not an attorney and do not give legal advice. This book is limited in scope and does not in any way attempt to disseminate legal advice. This book is solely intended to provide information in areas of common interest to the general public, and to provide a better insight to some options that may be available. If you have a specific legal problem, it is highly recommended that you seek the advice of an attorney.

John Carter

Printed in the United States of America

Dageforde Paige Publishing

TABLE OF CONTENTS

Introduction         

SECTION ONE

The Credit Bureau and You     

Understanding Credit     

The Credit Reporting Business 

You Have Rights  

What Can Be Removed From My Credit Report?  

Non Verifiable Entries That Are Correct

Non Verifiable Entries That Are Partially Correct

When a Creditor Requests Deletion of a Negative Statement

When a Negative Entry Doesn't Belong To You

Entries That Are Outdated

When a Negative Entry Belongs To a Former Spouse.

The Credit Bureau Also Has Rights   

Stay Confident

@Stand Up for Your Rights     

Negotiation An Alternative      

Create Your Own Positive Credit File

Beware of the Credit Repairer for Hire

The Steps to Credit Repair

SECTION TWO

·      Collection Agencies and Debt Collection Practices

·       The Fair Debt Collection Practices Act       

·      Publication of Lists of Alleged Defaulted Debtors

·      @Z_TOC LVL 3 = Advertising a Debt for Sale TTo Force Payment

·      @Z_TOC LVL 3 = Telephone Calls Which Harass, Annoy or Abuse

·      @Z_TOC LVL 3 = An Employee of a Collector Must Disclose His Identity

·      @Z_TOC LVL 3 = Deceptive Threats Prohibited

·      @Z_TOC LVL 3 = Deceptive for Dunning Letters To Appear To Be Telegrams

·      @Z_TOC LVL 3 = Contacting or Threatening to Contact Third Parties Prohibited

·      @Z_TOC LVL 3 = Misrepresenting Adverse Impact of Nonpayment On Credit Worthiness

·      @Z_TOC LVL 3 = Misrepresenting that a Claim Has or Will Be Transferred To an Attorney or Separate Legal Department

·      @Z_TOC LRight To Stop Collection Contacts

·       What Debt Collectors Don't Want You To Know  

·       How Collectors Find You

SECTION THREE

Establishing Credit  A Fresh Start

·       A Fresh Start       

·      Where To Apply for Credit

·      The Rating Categories

·       Establishing Bank Credit

·      Secured Credit Cards

·       Resident Banks Offering Secured Credit Cards     

·      Banks with Low Credit Card Rates

 SECTION FOUR Sample Letters and Form Letters

·      SAMPLE LETTER #1   

·      SAMPLE LETTER #2   

·      SAMPLE LETTER #3   

·      SAMPLE LETTER #4   

·      SAMPLE LETTER #5   

·      SAMPLE LETTER #6   

·      SAMPLE LETTER #7   

·      SAMPLE LETTER #8   

·      SAMPLE LETTER #9   

·      SAMPLE LETTER #10 

·      SAMPLE LETTER #11 

·      SAMPLE NEGOTIATION LETTER

SECTION FIVE   

Sample Certified Mail Return Request and Credit Report

·      SAMPLE  Domestic Mail Return Receipt (BACK)

·      SAMPLE  Domestic Mail Return Receipt (FRONT)

·      SAMPLE  Mail Receipt 

Credit Bureau Information   

Sample Credit Report     

Your Credit Report        

SECTION SIX      Fair Debt Collection Practices Act     

SECTION SEVEN Fair Credit Reporting Act        

IntroductionINTRODUCTION

CONSUMER LEGAL ASSISTANCE SERVICESFINANCIAL SERVICE CENTER is a self‑help document preparation assistance service in which consumer documents are prepared and filed without the high cost of attorney fees. It is also a legal information center providing forms, information, and services to consumers, helping them to understand what their consumer rights are under consumer protection laws, and how to assert them. There are two primary areas in which consumers are assisted to help them save money. J&K PARALEGAL AND TAX SERVICESFinancial and Tax Services operates in partnership with Consumer Legal Assistance Services in the are of Tax Law and Income Tax Preparation.

As a DOCUMENT PREPARATION SERVICE CENTER, helping attorneys and the public directly in a number of areas, the consumer is assisted by providing legal support and information on: Simple Wills, Landlord‑Tenant, Power of Attorney, Divorce, Lease Agreements, Living Together Agreements, Simple Trust, Incorporations, Guardianships, Credit Consulting, Small Claims Assistance, Process‑Serving and Tax Matters PreparationConsultations.

Consumers can avoid the high cost of attorney fees by assisting in the preparation and filing of those documents that can be done without an attorney. Consumer complaints are investigated and helpassistance is offered in filing those complaints in filing them with the proper consumer agencies is given.

An area of special expertise is aiding consumers in Debtor‑Creditor Law, and Credit Repair. Clients are helped to recognize and battle the illegal debt collection practices of collection agencies, the Internal Revenue Service, and are shown an alternative to bankruptcy.

For those individuals who have had credit problems, information assistance is provided for help in restoring a good credit report that makes the consumers aware of what their rights are under the Fair Credit Reporting Act and follow‑up with credit bureaus.

Questions about services offered, or if assistance is needed, please write or call us today!

CONSUMER LEGAL ASSISTANCE SERVICESFINANCIAL SERVICE CENTER

PO Box 6826

San Diego, California 92166

 (619) 994-0792106 5th Avenue West

Benkelman, Nebraska 69021

(308) 883-1726

section oneSECTION ONE

The Credit Bureau and You

Understanding Credit

There are many consumers today who have, at one time or another, been the victims or subjects of negative credit information. Unfortunately, most of the time information passed on concerning the consumer isn't even accurately reported by the credit bureaus.

Actually, the whole credit reporting system has become a joke and is a new method to discriminate between people that are working class middle andlow income earners and the higher earning social elite. Much of the time high income earners do not have to credit qualify for anything they borrow. Their loans are often granted based on relationships with their banker or their political status in the community.

If you were to review your credit report from the three major credit bureaus, you will get three diffent credit results (scores). This is largely because the credit bureaus are in competition with one another and various creditors may not all report to all three credit bureaus. That’s an odd policy for the Federal Trade Commission to allow since your credit profile is suppose to paint an accurate portrait of who you are as a consumer.

Your credit profile is used for character reference decisions for potential employers, lower insurance and banking rates and to determine if a personseeking a security risk a high risk to be compromised in a national security position. Since so much weight is put on a magical number in a credit score, it’s a wonder why is it not much more regulated to be restrictively correct ornotbereported at all if the information is negative.

The purpose of this book is to provide you, the consumer, with information that you need to be informed and ready to take charge of your personal credit information. These credit techniques are for the thousands of consumers who needlessly suffer from incorrect credit information collected and reported about them by credit bureaus.

If you have had credit problems due to divorce, bankruptcy, loss of job or income, business failure or any other financial crisis, then this information is just what you need to get a fresh start.

If you are numbered among those consumers who have fallen victim to using too much credit, you will also find this information valuable (especially the debt collection section). This information is offered to those consumers who fully understand what went wrong the first time and wish to start over again, but this time with a greater appreciation of what credit is and how to use it to their benefit.

Are you trying to improve your credit score to gain access and wealth? NEWS FLASH! Credit scores are for minorities, single women, working class and marginal business people. True wealth building is based on relationships, not credit scores. Many consumers are taught to believe that a good credit score will open the door to endless business opportunities and advancements. However, the credit system is actually designed to monitor and control minorities, immigrants and the non-financially elite. Being financially successful in America is based on a good banking relationship with a personal banker. Not a credit score. There are many business people and the top one percenters that borrow money from banks and other investors and never fill out a credit application.

Have you ever watched the show Shark Tank? Entrepreneurs go to that platform to ask for thousands or even hundreds of thousands of dollars based upon the Sharks trust of the person and the potential business and financial relationship that can be developed. Bankers are the same way. A banker decides in the first five minutes of his initial meeting with you whether or not he or she will engage in a business relationship with you. Even with a near 800 credit score, bank and credit unions have been known to turn credit applicatesapplicants down based upon their personal knowledge of the borrower, or some other external influence. This fact makes lending very subjective. The credit reporting business was developed to hide the discriminatory selection of who will and will not get finance under a smoke screen. The credit reporting industry is run, controlled and directed by your creditors and banks. They are paid to keep track of your financial transactions.

Navy Federal Credit Union is an excellent example of that kind of credit bias. Their lending criteria is based largely on your past banking relationship with them or their employees personal knowledge or opinion of the borrower. Even with a credit score of 760 and a monthly income of nearly $6,000, Navy Federal Credit Union turned down a borrower’s request for a loan because an employee felt the borrower had “caused them a financial loss in the past.”

Actually, the borrower had filed for chapter 7 bankruptcy relief and opted to reaffirm the debt with Navy Federal Credit Union, which was approved by the Bankruptcy Trustee. Instead, Navy Federal Closed all of the borrower’s accounts, (even the ones that had nothing to do with the bankruptcy filing), and captured and confiscated $42,000.00 from the borrower’s savings account at Navy Federal and did not return the money. How did that borrower causesue a loss, when in fact, the Credit Union gained $42,000.00 in funds it had no legal basis to confiscate. Navy Federal was eventually sued for this ridiculously unlawful and bias conduct and ended up paying millions of dollars to their members who had been victimized by their unlawful credit bias.

This is the kind of unreasonable bias that the credit reporting system was designed to prevent. The requirement of a credit score to meet the qualification to borrow money from a lender is supposed to bestrictly based on an objective standard. However, this has obviously changed over the years and now diifent lender put their own overlays on top of whatever “objective standard” was set.

This also happens with loan granted to veterans from the veterans administration. The actual credit score requirement for a veteran toqualify for a V.A. backed loan is zero. There is no minium credit score required because the loan is absolutely guaranteed. However, a lender can still impose its own minimum score requirement for veteran to “qualify” toelse be denied. This happens all the time and is never challenged in the courts.

Therefore, do you think the credit reporting agencies, banks and credit unions are truly unbias when it comes to your overall financial ability? Let’s get started.

The Credit Reporting Business

Many consumers are unaware of what the credit bureau really is and how it works. It is important to know first and above all that credit bureaus are not in business to serve you. It is actually paid and kept in business by its many clients (your creditors). It is the credit bureaus' job to collect, store, and retrieve information regarding millions of consumers. This is quite a costly undertaking, not to mention the problem of updating all of those credit profiles.

The business of selling information is a multi‑billion dollar industry in America. More and more, the United States is moving toward becoming a cashless society. Not only is credit an important prerequisite for financial transactions, but in many cases before employing a person, virtually every bank, governmental agency, and business will purchase a credit report on you. Therefore, it is important that the information obtained about the consumer be correct in the credit report. However, in many cases, it is not.

The principal duty of the credit bureau is to assist its client, the creditor, in weeding out those persons who are considered great credit risks due to a negative credit history. After all, what use would the credit bureau be if it only had positive credit to report? Does this mean that the credit bureaus are against the consumer? Of course not. ButHowever, it is not for you either. The Credit bureaus are out for its their own financial interest. So how can you do battle with these giants and win? Read on and you will soon discover the secrets to winning the credit battle.

Credit reporting has also been largely responsible for singling out and discriminating against ethnic minorities, as well as those in the lower socio‑economic levels. Since racial and gender discrimination is illegal, merchants who want to discriminately select who they do business with had to devise some means to weed out the undesirable credit risks. This has also been done by the credit bureau by flagging certain areas by zip codes to redline areas of high credit risk. These are usually known as lower income areas.

There is hardly anywhere in America that a person can go and conduct business without the need, at some point in time, of good credit or a credit card. Big ticket items such as automobiles and houses and even good insurance rates have always required the need of a good credit rating and report. But what about the rental of a car, or the purchase of a magazine by mail, or a hotel reservation? People who have a less than desirable credit report often are the victims of high interest rates, or demand of large, and sometimes unreasonable, cash deposits to make the same purchases as those who have  <169>good credit.

You Have Rights

Under The Fair Credit Reporting Act, consumers have very specific rights. One of the fundamental rights is to allow a consumer to obtain a copy of his/her credit report at no cost if the consumer was denied credit within the past thirty days. But more importantly is the consumer's right to challenge information recorded in the report that a person knows or believes to be inaccurate or not applicable to him or her. The credit bureaus must then investigate any item that the consumer challenges. This investigation is conducted by the credit bureaus by checking and requesting verification of the alleged debt from the creditor involved. The creditor has a maximum of thirty (30) days to verify the information that has been challenged by the consumer.

Under Per The Fair Credit Reporting Act, every challenge must be responded to by the creditor and the credit bureau. If the creditor fails to verify the disputed item within the thirty- day limitation, then the entry MUST BE REMOVED. Failure to obtain verification is where the system falls apart to your benefit. The creditor often views the task of having to submit updated information to the credit bureau as an inconvenience, and therefore may not do so. Further, the creditor may not have recorded the information accurately and therefore cannot verify the entry on your credit profile, or the account may have been closed for more than two years. Most creditors do not keep good records on old closed accounts, or accounts that have been charged off for more than two years.

Another common situation is that the creditor is out of business. If the credit bureau does not receive a statement verifying the information that you have challenged within thirty days, that information, by law, must be stricken from your credit file whether it is accurate or not. Credit bureaus do not have any way of knowing the validity of a debt without the creditor.

This is a powerful tool for the consumer. It makes perfect sense that information which cannot be verified should not be held against you, even if that information is entirely accurate. This weak link or loop hole in the credit reporting system can be made to work to your advantage by challenging negative information that appears in your credit profile. If the first challenge does not eliminate the entry, challenge it again and again until finally it no longer appears on the report. However, your challenges must not be frivolous. In other words, there must be good reason to challenge the entry. Each challenge prompts the creditor to be contacted by the credit bureau with a request for verification of the information. Somewhere along the line, the creditor may fail or decline to submit updated information and the entry is subsequently stricken from your credit profile. But for every challenge or request that you make, it must be responded to by the creditor.

This technique is not fool proof. The creditor may indeed verify the information. If that is the case then you still have other remedies such as negotiating directly with the creditor, or writing a letter in one hundred words or less to the credit bureau explaining your side of the story concerning the disputed debt. Care must be taken in using this method because most banks and financial institutions view disputed items on a consumer’s credit report as a negative item. This is especially true when seeking a mortgage loan. A mortgage lender will usually require that the disputed entry be removed or resolved before a consumer may proceed with the loan. This makes perfect sense when considering on whose behalf these credit reporting agencies are set up to benefit.  

Another technique that consumers use to update their credit profile is to have your credit profile updated on fast track. Most mortgage lenders know credit consultants that do that type of work. For example, if you are attempting to get a home loan, but there are a few items that need to be paid to zero or negotiated before the loan can be granted, you can take care of the issue and have the updated credit issues reported on your credit profile after five to seven business days. That is much better than waiting a full 30 to 60 days for the collection agency to update the information. Be sure to always request a letter or some form of written documentation for any credit negotiation or credit file updates.

This rebuttal must be made part of your permanent credit profile. Some cCreditors usually may overlook negative entries that consumers have taken the time to challenge, but all do not. . Further, if the verification does not go well for the credit bureau, you have managed to raise reasonable doubt that the entry could be made to accurately reflect the facts. Credit bureaus can be sued and/or fined by the Federal Government if it knowingly reports information that is wrong, not validated upon your request, and even when the integrity of the entry is questionable. Many times the information, though verified to the credit reporting agency, may not have been accurately documented or verified by the creditor itself. If you suspect that there were errors in the billing or the balance that was outstanding, it needs to be brought to the attention of the creditor.

More often than not, the credit bureau will give the creditor more than the allowable response time in hopes that the creditor will respond before the consumer makes the second inquiry. This is why it is essential that you send everything by certified mail with a return receipt to document the date that each request was sent and received. If the creditor did not respond as required by law, do not ask the credit bureau to send another challenge letter regarding that entry, but demand that the entry be removed altogether. This is especially true in smaller communities in the Mmid‑Wwest where the credit bureaus are small and do not process the volume of credit requests as in larger cities. It may even be a good idea to send your request to the larger credit bureaus in bigger cities. They are much less likely to give a written request personal attention.

You also have the right to demand that the revised report be sent to everyone who obtained your report in the last six months, after you have updated and had negative entries removed from your credit report. And Iin the case where the report was obtained for employment purposes, over the last two years.

This privilege should only be used when you feel that your position with an existing creditor or one who has denied you credit will be strengthened. It is your right, but use it with discretion.

What Can Be Removed from my Credit Report?

Non Verifiable Entries that Are Correct

When the accuracy of an entry cannot be verified even though it is correct, by law it must be removed from your credit profile. This usually occurs when the original creditor is no longer in business, or the account has been closed or charged off for more than two years. If the creditor does not respond within the thirty- day time limit as required by law, that entry must be stricken from the report. Therefore, it is also important to challenge entries on your credit report and request that the entries be verified. The FCRA prohibits the reporting of obsolete adverse information. As a result, most adverse information more than seven years old may not be reported. The FCRA does not restrict reporting information that is not adverse. So good credit information may stay on the report for an indefinite period of time.  There is no requirement that agencies report information for the full seven years. Agencies can delete adverse or favorable information from reports whenever they wish before the seven- year period. This is extremely important for a consumer to know when attempting to update or correct a credit report. Most merchants and third- party debt collectors will ill advise a consumer that the law states that an adverse entry must remain on the credit report for seven years. That advice is simply not true. But in order to correct the information, you must be aware of your credit rights as a consumer.

Non Verifiable Entries that Are Partially Correct

When the entry has a partial error and the credit bureau fails to get verification from the creditor, that entry must be deleted.

For instance, if the report shows a write‑off for $200.00 and the actual unpaid balance was $225.00, this is the incorrect portion of the entry and may justify removing the entire entry if verification is not made, even though the portion about the write‑off itself is correct. This often occurs when the debt has been assigned to a collection agency and the collection agency adds unreasonable fees and interest to the original balance. Remember that the credit report has to reflect your true credit status. If the entry is partially wrong, then the entire entry is wrong and must be corrected or removed. Don't tell the credit bureau why the entry is wrong because then it will only change it as you, the consumer, have given it the correct and most up‑to‑date information. It is the credit bureau's job to verify the debt with the creditor and make the proper corrections. That verification should be in writing and a copy of the verification sent to you upon request.

This is the problem with using the credit bureau apps like Credit Karma, Chex Systems, Inc. and many others. They appear to offer consumer help and resolutions for adverse or incorrect credit information, but do not be fooled by that marketing scheme. The responses on those apps are limited. The consumer’s responses are directed and restricted to the categories programmed into the app, which may not be address the consumer’s key issue that is causing the adverse credit problem. It is better to actually write a letter to the credit bureau to dispute a negative entry that use the apps provided by the banks credit monitoring agencies.

When a Creditor Requests Deletion of a Negative Statement

When the original creditor requests that the negative entry be reversed or deleted, the credit bureau will usually comply. Credit bureaus are in business to serve the creditor so it usually grants the creditor's request. Besides, it makes sense that if the creditor puts the negative information into the credit bureau in the first place, then the creditor can go back and take it out. But you need also be aware that creditors and credit bureaus usually sign an agreement that the creditor will not make a practice of reversing negative credit information. This does not mean that through careful negotiation with the creditor it is not possible. It does mean that trying to get big companies to update negative information about you submitted on their behalf, is extremely difficult.

When a Negative Entry Doesn't Belong to You

A person with a name similar to another person's name could find a negative entry on his/her credit profile that belongs to another person. This is especially true if you have parents or children with the same or similar names, for example, Paul S. Walker, and Paul S. Walker, Sr. These may be two different persons entirely, but the credit bureau may often confuse the two to a disastrous financial end. That's why it is good to check the information in your credit profile every year. If you suspect this error, you have the right to challenge the entry based on the fact that it doesn't belong to you. This type of error in the credit reporting system is very common.

Entries That Are Outdated

There are statutes of limitations on how long certain entries can remain on a credit report. Credit inquiries usually stay on for two years unless challenged; bankruptcies ten years and other negative entries for up to seven years. However, it is up to you to ensure that these items are removed if the time has expired for them to show on your credit report. As stated earlier, credit bureaus are the data storage base for millions of consumers. The possibility of keeping up with the constantly changing credit profile of every individual is quite an irksome task even with computers. You, yourself, must make certain that outdated information is removed. The credit bureau will not do it for you automatically. Remember, the credit bureau does not work for you, it works for the creditor.

When a Negative Entry Belongs to a Former Spouse.

A common problem is when two people divorce and one creates a credit problem for the other after the divorce. If you have had a divorce, you may not have to be held accountable for negative credit entries that were caused by your former spouse AFTER the divorce. In this case, you should contact the credit bureau and explain to it that the negative entry was caused by someone to whom you are no longer married.

It can be quite frustrating when your credit profile does not reflect the status of your true credit worthiness. It is not fair that consumers may have to suffer several years because of this erroneous information, if it is not challenged and corrected. The fact that this negative information stays in the system for so long if unchallenged is one of the flaws in the system. This is why you must take it upon yourself to ensure that all entries are correct and, at the same time, work to remove any negative entries you can, accurate or not.

Public Record Information

Special problems exist where agencies review, interpret, and then manually record public record information. Errors can occur when the employee misunderstands or misinterprets the public record information, or makes errors copying the information from the public record source. In addition, information as it appears in the public record,  can be constantly changing based on correction of public record errors or change in matter’s status. This is very important because reports of a criminal record or unpaid judgment or child support may be enough for the consumer to be denied employment, insurance, credit or other benefits.

Records of arrest, indictment, or conviction of crime which, from the date of disposition, release or parole, antedate the report by more than seven years are obsolete and must not be reported. For obsolescence purposes, the date of parole is determined from the beginning of parole and not from its completion. Confinement may be reported for seven years from the date of release or parole. Acquittals and dismissed charges may be reported for seven years from the date of dismissal. If there is no confinement, a conviction may be reported from the sentencing date.

Once the seven- year period has passed the credit reporting agency can no longer report the adverse information to an employer. So, if you have been denied employment based on a conviction over seven years ago and that information was obtained through a credit report by the employer, it is time that you contact the credit bureau.

In most jurisdictions currently, if a criminal charge was actually dismissed, any information concerning that criminal charge may not be reported and the record of it is expungued and sealed. Only law enforcement and the courts can retrieve, view and use that information for criminal justice purposes. Any knowledge of the dismissed criminal charge cannot be mentioned, verified or even discussed against the consumer once it has been dismissed by the court.

Many states now have adopted a criminal expungement program for past offenders that that completed their probation, parole or community service obligation for misdemeanors and felony convictions, if more than two years have past and no new police contacts or issues have arisen. Traffic citation are not included. The application for expungement can be requested from the office of the Governor or the local district attorney. Most jurisdictions offer the forms online. Once the process is complete, you can then answer no to questions on housing and employment forms asking if you have ever been arrested and or convicted for felony or misdemeanor crimes.

However, there are some exceptions and limitations to the program. Sex offenses and certain other crimes that have high incidence of repeating are usually not eligible for the expungement programs since sex offenders are obligated to actually register in any jurisdiction where they reside and that information is usually public on the state police community information website.

Suits, Judgments and Paid Tax Liens

Information concerning suits and judgments are obsolete after seven years from their date of entry or until the governing statue of limitation has expired, whichever is longer. For suits, the date of entry is the date the suit was initiated and for judgment the date of entry is the date judgment was rendered. Paid tax liens may not be reported more than seven years after the date of payment. This allows the lien to be reported for more than seven years from when the lien was first due. On the face of the statue, unpaid tax liens and other liens, whether paid or unpaid, are within the catch-all seven-year limitation for any other adverse item of information.

Child Support Debts

In 1992 Congress amended the FCRA to require a consumer reporting agency to include overdue child support in any report issued for a permissible purpose, if the over due child support information is provided by a state, or local child support enforcement agency. If the information is provided by any other entity or person, its inclusion is mandated only if verified by a government agency-local, state, or federal. The overdue support, like other information, can  be reported  only for seven years from the date it is overdue.

Keep in mind that a state agency may still report a fully paid child support obligation as delinquent if the state is still collecting interest on the old child support obligation. Even though it is truly no longer an active or valid child support obligation, but instead a debt for interest to the state, it will be reported as delinquent child support so that the state can continue to collect it into infinity. This a a slimy loop hole that most states like California practice against its consumers. Unfortunately, such an erroreous and bias reporting can also prevent the consumer from beingable to obtain a passport, get certain consumer loans and even qualify for federal and state tax rebates and credits.

The Credit Bureau Also Has Rights

Not only are consumers protected under the Fair Credit Reporting Act, but the credit bureaus have certain rights under the act as well. The Act provides under Section 611 that the credit bureau can refuse to reinvestigate frivolous or irrelevant disputes. There is no specific definition in the law that describes what frivolous or irrelevant is, therefore it is left to the interpretation of individual credit bureaus.

In most cases, however, it is too expensive for the credit bureau to analyze the relevance of tens of thousands of requests for credit reports to be reinvestigated. So Therefore, it is unlikely that it will challenge your dispute if it is done properly. But if, in fact, the credit bureau does decide to refuse to reinvestigate your dispute, it must, at your demand, state clearly on your credit report that you dispute the entry, and it must add it to the explanation that you submit. However, if you use this approach, keep in mind that many mortgage lenders will or cannot close on a mortgage loan with open disputes on a consumer’s credit report. The mortgage lender may require that prior to the loan closing, you will have to settle and have removed any reported disputed item on the credit report. This tactic came about through a collaborative effort between the banks and the credit reporting agencies to even keep a disputed credit item in a negative category on a consumer credit report.

You can avoid this loophole, advantageous to the credit bureau, by using some common sense. The most sensible approach for avoiding being frivolous or irrelevant is to begin by challenging only those items that you genuinely believe are inaccurate or have the best chance of getting deleted. If you are determined to challenge every entry, then you must do so over a period of time that does not put you in this category.

Stay Confident

It is important for you to realize that the credit bureaus and creditors alike think nothing about putting negative entries into your credit profile. Many creditors may even do it for the wrong reasons; for example, as a means of forcing you to quickly pay off a debt, which is an illegal debt collection practice (that will be discussed later). Therefore, you must be confident and persistent in demanding your right to challenge under the law. There are a few guidelines that you can follow to accomplish this. A few of them are:

1.Understand the real purpose of the credit bureau.

2.Know your rights both as a consumer and individual.

3.Be systematic in your approach.

4.Demand your rights in a matter of fact manner.

5.Don't be frivolous about challenging entries.

6.Follow up on every request; don't give up.

7.Set your goals and stick to them no matter how long it takes.

Stand Up for Your Rights

Now in every plan or situation there are always those unforeseen things that come up. Even in this situation there are a few basic rules that apply to help you get over the obstacle. Your rights as a consumer don't change just because someone gives you a hard time about those rights. You must be just as persistent to get the negative entry changed as someone may be to keep it unchanged. Always remember, the negative entry adversely affects you, not the other person. So be confident in your right to have the negative entry updated or deleted.

In this credit correction business, persistence is the name of the game. Many battles have been won because the consumer was persistent in demanding the change be made. Don't allow yourself to become confused by some longwinded procedure you are told to follow. Procedures of any kind do not negate your rights. If you don't understand the procedure, ask that it be explained over and over again until you do.

In some cases the credit bureau or creditor may refuse to work with you. This shouldn't happen as long as you stay within your rights according to the Fair Credit Reporting Act, but then again not every creditor is aware of what the law is concerning fair credit reporting. If this event should occur, just reinstate your request, or at worst, discuss with the creditor the reason for your request. If all else fails, you always have the right to file a complaint with the Federal Trade Commission, which is the agency governing fair credit reporting and enforces the law.

Some of the more notorious creditors and collection agencies that refuse to work with consumers in removing erroreous, outdated or paid as agreed collections are Cox Communications; Verizon Wireless; Dish Network; First Premier; Capital One; Viaero Wireless; Navy Federal Credit Union; State Revenue Agencies; National Account Systems; NCO Financial; Encore Capital Group; Portfolio Recovery Associates; Transworld Systems; Resurgent Capital Services; Citibank, N.A. These agencies will tell you they cannot remove negative entries if you agree to pay off the debt or negotiate it. However, anything is negotiable. Just be sure to get any agreement to pay off a collection account in writing and also record the conversation in case the collection agency has a policy of routing calls from one associate to another in order to confuse the issue on what was actually agreed upon concerning the payment and correction of the credit information.

Don't challenge everything at once. If you send a letter to the credit bureau saying that everything is wrong, it will regard it as a frivolous attempt to delete negative entries. And, in this case, the correct assumption is that the law will be on the credit bureau's side in its refusal to do anything about updating your credit profile. You should challenge one out of every three negative entries at first, and then move on to others, especially if your credit profile is riddled with negative entries. This approach will take some time, probably anywhere from one to twelve months, but it is the best approach. Take it sloww,,  and take your time. If you have had negative credit for a number of years, then you should be interested in getting your profile updated effectively, not quickly.

Be professional in your dealings. Nobody works well with people who are belligerent. The young woman or man at the credit bureau did not cause your problem, so it should not bear the brunt of your anger. He or she can help you resolve your problem. In fact, you don't have to be belligerent at all because the law is on your side. Take a calm matter‑of‑fact approach. You'll achieve much better results.

Let the credit bureau provide the proof about your credit profile. If the credit bureau wants to collect and sell information about you, then require it to verify and update that information. To take any other approach would not be prudent. Let the burden of proof rest on the credit bureau.

Don't reveal your credit objectives to anyone. If you reveal that you are attempting to erase all of your negative entries, you can be headed off at the pass. The credit bureaus and creditors will then view your requests and attempts as an irritation, and may even set up effective obstacles to defeat your goal.

Don't educate the credit bureau by giving it more information than needed. It is the bureau's job to investigate and verify the information that you challenge. For instance, if an account is past due by 90 days on your credit report, don't tell the credit bureau that it is really past due by 120 days and, therefore, is incorrect and should be deleted from the credit report. You just told the bureau exactly what was wrong with the entry, and now all it will do is insert the correct information that YOU supplied them. Instead you should say, I believe the information that you gave about such and such account is incorrect. Let the credit bureau figure it out.

Beware of the online credit dispute forms offered by Credit Karma the major credit bureaus. The online credit dispute is actually a trap and another collaborative effort to short cut performing the task of verification that the law specifies the reporting agencies must do. For instance, the online dispute for is very limited in scope. It has predetermined dispute categories that you must select from. However, there are a few reasons that a negative entry can be removed from a credit report that you will not find listed among the options on the online dispute form. If an entry has been reported for more than seven years, for example, and therefore must be removed, you do not find that option listed on the reasons for dispute or removal of a negative credit entry, although under the law it is a very valid reason.

Your credit privileges cost you money in sizable interest payments. Don't let all your past investments go to waste because your credit profile is blemished. If you do not stand up for your credit rights, no one else will.

Negotiation- An Alternative

Although the challenge method for the removal of negative entries is effective, it is not 100% guaranteed nor fool proof. A good alternative is negotiation. This is a good alternative when the entries you challenged were either confirmed by the source, or the account is still in an active status but you need to update your file for some future financial transaction.

In negotiating with a creditor, an attorney’s presence is helpful. Where this is not possible, the consumer should enlist the aid of a sophisticated friend or associate to provide moral support and to make sure the consumer is not talked into a bad deal by the creditor.

Creditors want you to pay your debt and will usually work with you to get that accomplished. You can negotiate getting the negative information removed or updated with the original creditor who submitted the information to the credit bureau in the first place in return for full payment or a payment over time under the terms of a new contract. If your negotiations are successful, then you can make a request to the creditor to delete the negative information from the report.

When a creditor makes a request for information to be deleted from a consumer's credit profile, that information must be deleted. The credit bureau has no basis for keeping the information on the report if the original creditor requested that it be deleted. If the creditor grants your request based on your promise to pay or other negotiation terms, remember that the creditor can always report a credit problem at any time. So, it is important that you adhere to the terms of your agreement with the creditor. If a promise is breached, then the creditor may not be as receptive in any further negotiations for removing negative items from your credit report.

You should also be aware that some creditors and/or their employees are notmay not be aware that they can request that the credit bureau remove (delete) the negative entries. Just because businesses are subscribers to the credit bureau does not mean that they are informed about all of the consumer credit provisions under the law. A creditor may tell you that he cannot remove any entries that he reported once they are on the credit report. This is not factual. The creditor may either be uninformed concerning the law, unwilling to remove the entry altogether, or have signed an agreement with the credit bureau that his company will not remove negative entries from consumer credit reports as a result of later negotiations for payments.

This is a very important issue because you, the consumer, hold the leverage, which is paying the debt. If the collection agency refuses to remove the negative entry in consideration of you paying the debt in full, then do not pay it. Call the original creditor and talk to an upper management person and explain to them that you contacted the collection agency and you have been attempting to pay the outstanding balance in full. However, the collection agency has refused to remove the negative entry from the credit report due to its agreement with the original creditor. Tell the original creditor that there must be something bargained for in exchange when it comes to negotiations. You are willing to pay the balance due (or an agreed lesser amount) in exchange for the collection item to be completed deleted from the credit report. Do not settle for an updated entry of “paid as agreed.” To a mortgage lender or bank considering a vehicle or other consumer loan, it is still negative because it still reports as a past collection account.

Many consumers seek the help and advice from non-profit consumer credit agencies when attempting to negotiate with a creditor(s). But remember, even non-profit credit counselors may receive funding from creditors and cannot be expected to advocate aggressively for consumers or point out legal defenses the consumer may have. In any negotiation, consumers should not be affected by threats to turn accounts over for collection (collectors cannot do anything to a consumer that the creditor could not). Similarly, the threat to furnish a negative credit report should not be effective because the creditor has already done so, and the issue in the negotiation is what type of payment will the lender accept in return for cleaning up the credit record.

Some basic guidelines for negotiating with your creditor are as follows:

Work with the creditor on negotiation terms that both of you can live with. Be realistic, and don't make promises that you know you cannot keep or will be difficult for you to keep. Remember, the creditor is also a consumer outside of his capacity as a business person and has personal debts and obligations of his own. He, too, can appreciate the value of an understanding creditor.

Never make demands. Negotiate for terms that are fair. People are often resistant, by human nature, to being forced or pushed into something. The harder you push the more stubborn they may become.

Be sincere in your negotiations and promises. This is very important. Your sincerity can be the deciding factor on whether or not the creditor accepts your terms. That’s why it is important not to be pushed in to a repayment plan that you know you cannot afford.

Stick to the terms of the agreement. Do as you agreed, and the creditor will have no reason to retract his promise to you to remove the negative items from your credit profile.

Don't threaten the creditor. Make it clear that you are trying to avoid further financial problems, and you need his or her help to do so, but that is as strong as you should get. Use positive approaches such as, I value your services and would like to maintain my credit integrity with your company, or I need your assistance to help me to rectify this situation. But remember, this approach is to be used with the original creditor, not the collection agency. If you are dealing with a collection agency and he or she presses you, then by all means, press back.

Don't offer information about your intention to clean up your credit. Instead, say something like, I feel really bad that I have not been able to meet my obligations to you, but I would like to make arrangements with you to do so within my income.

Remain calm. In the creditor's mind he did not cause your credit problem, even if he did, in fact, cause it through a billing error or faulty credit reporting. A calm approach will prove to be much more effective and go much further than becoming irate and bitter. The reason that the creditor submitted the information was to protect himself and others in the future against unreasonable credit risk. (That is provided that the information was communicated in good faith.). However, if the collector is rude to you on the phone, request to speak with his/her supervisor.

Still another common misconception concerning creditors is that they should be avoided when you don't have the money to meet your financial obligations. Creditors are people, too and debtors themselves to other creditors. A good way to maintain good credit integrity is to maintain good communication. If you run a little short or become unemployed, call and advise the creditor of your situation and tell him you will not be able to meet your obligation on time. Most creditors are understanding and will work with you. Further, what many consumers do not understand is, if you contact the creditor BEFORE THE PAYMENT IS DUE and advise him of the problem, if the creditor agrees to a different payment arrangement than the one originally agreed to, then the payment is not late for the purposes of reporting it as a late or delinquent account to the credit bureau. The creditor was notified before the due date of the bill and agreed to a different arrangement. That gets you off the hook for being <169>past due <170> because the new payment date agreed to now becomes the new due date. Just always remember to adhere to your promises to pay when a creditor extends a grace period.

Create Your Own Positive Credit File

 If you have great difficulty in getting some negative entries removed, then counter them with positive credit entries. Most consumers are not aware that they can submit information that reflects a positive credit profile or history to the credit bureau. The major drawback to this, however, is that credit bureaus are not required by law to record good credit. This could make your effort to get positive credit recorded a bit more challenging since there is no law to support your argument for the positive entries to be inserted into the credit profile. However, a consumer could make progress by calmly insisting that positive entries be made. There is usually a nominal fee for this service which varies from bureau to bureau.

Another good consumer tip is to always ask a potential creditor if they report to credit reporting agencies. You will be quite surprised to learn that many businesses do not subscribe to credit bureaus because of the cost of maintaining such a data base. Some small credit unions, for example, do not subscribe to credit bureaus for the purpose of reporting negative credit. Telephone companies and some retailers also do not subscribe.

Usually consumer credit activity gets reported when a  good credit  status isn't maintained, even with these agencies, and the account becomes delinquent and gets assigned to a collection agency for collection. Collection agencies, however, are notorious for reporting to credit bureaus. They are faithful subscribers and use the tactic of negative credit reporting as a means of debt collection.

Beware of the Credit Repairer for Hire

The credit repair process isn't any quicker if you hire a professional. The very same techniques described here are the same techniques used by professional credit repairers. The key difference is that the professional credit repairer tends to be more aggressive in getting results for his client. In other words, he is not fazed by the amount of time it may take to update a credit profile, he is aggressively persistent.

This is the same attitude that you must take in order to achieve the same result. The professional credit repairer is armed with the rules of the Fair Credit Reporting Act. This information is also included in this book. You should thoroughly familiarize yourself with the applications of the FCRA (Fair Credit Reporting Act).

You can very well repair your own credit. All of the procedures explained to you in this book are based on techniques used by professionals. All of the sample letters and forms you need are enclosed, but at a fraction of the cost. You now have the knowledge and the tools at your disposal. Why not try it for yourself first? You have little to lose and everything to gain.

A professional credit repairer can be a valuable resource for many people. However, you need to evaluate for yourself the benefits versus the disadvantages (the cost of a professional repairer). Try it for yourself first. Then if you are not satisfied with the results of your efforts, seek the assistance of a professional. But be sure to check the credibility of the professional you choose to employ. Many consumers have been disappointed by the lack of follow up, or nonperformance by those who call themselves professional credit repairers, but are nothing more than professional con men. Ask the credit repairer for a list of references and then call and check him out carefully. Also be sure to contact the Better Business Bureau to ensure there are no unresolved complaints regarding the person or business you hire. Don't be afraid to ask, after all, it's your money.

Congress passed a law after 2010, that credit repair companies for hire cannot charge up front fees for services. Due to the overwhelming amount of fraud that occurred during the mortgage crisis, the law was amended to require a credit repair company actually get paid after some results of credit report or score improvement has become evident. Some companies developed policies that a consumer can pay a monthly fee for the services provided by the credit repair company. Many non-profit agencies operate in this manner. That is acceptable because if you do not see that hiring the company to help improve your credit is actually making any progress, you can stop paying the monthly fee until there is some positive result. However, paying upfront fees for credit repair services is now prohibited. Therefore, if a credit repair company demand upfront fees for services, it’s probably a scam.

If you attempt to update your credit file on your own first, at least you should have developed a good understanding of the techniques that the professional might be using. Also, by then, you may have removed some of the negative entries yourself.

The Steps to Credit Repair

1.Obtain a copy of your credit report from each credit bureau. It may take up to two weeks for a credit bureau to respond to your request for a credit report.

2.Read and try to fully understand each entry recorded on the report. An explanation of the codes is on the back of the credit report. Some bureaus may send you a booklet explaining the meanings of the various codes and symbols. Some codes may vary from bureau to bureau, but basically the information is the same.

3.Prioritize the negative entries that you will challenge by seriousness. For example: bankruptcies, repossessions, tax liens, and charge‑offs will be the most serious negative entries.

4.Select the proper letter for requesting an investigation of the negative entries from the section in this package titled sample letters. Handwritten letters are usually more effective because they do not give the appearance that a credit counselor is helping you. If the credit bureau suspects that your request for deletion of information is simply the work of some credit counselor attempting to improve your profile, it may deem your request as frivolous.

5.Send the letter to each credit bureau with the challenge letter enclosed by certified mail, return receipt requested. By law the credit bureau has only 30 days to verify the information. If it cannot be verified in that time, the information must be deleted from the credit file forever. Sending all correspondence by certified mail, return receipt requested will give you a good dated record of how much time the credit bureau has to process and update your request.

After about forty‑five days or so, the credit bureau will send you a copy of your updated file. You will notice that most, if not all, of the items you challenged are now deleted from the file. If there are items that remain, refer to Section Four on the appropriate sample letters to send in order to request a reinvestigation of items that remain on the report.

If for some reason you don't hear from the credit bureau after about forty‑five days, send sample letter number 6 to request a follow up report. Remember, all correspondence to credit bureaus should be sent certified, return receipt requested.

If you have followed these simple steps, your credit report should be much improved after the first request for deletion of negative information. This is the same simplicity that professional credit repairers use, but charge clients hundreds of dollars for the same results. Another technique that is often used, as stated earlier, is to continue to challenge the negative entry. For every challenge that you submit, the credit bureau and creditor must respond. The moment one fails to do so, the negative entry is permanently removed from the file. If you use the credit reporting agency’s online dispute, it will simply report back that the information has been verified and the negative entry will remain as reported. Sometimes, it will even document that the challenged entry is “disputed by the consumer.” Remember, however, that information is a smoke screen and still screams to a potential creditor that the entry is still in an active collection status and is considered negative. It also negatively impact the consumer’s credit score.

The best time to commence cleaning up your credit file if you have a lot of negative entries to challenge is during the months of July, August, and December. Most of the more experienced employees of the credit bureaus are on vacation during these periods of time, and the lack of staff works to your advantage when it comes to meeting the deadlines. Further, less experienced counselors may not be aware of all of the investigative techniques used by the more experienced counselors. Therefore, their ignorance and or lack of experience will allow you to successfully challenge and remove more negative entries during vacation months than at other times.

You may also make an appointment and personally consult with a counselor in regard to the negative entries in your credit file. The disadvantage to this approach however, is that you are there personally with the counselor to give a direct answer to any question that he or she may have as to why you are claiming that the entry is incorrect.

 Remember, the credit bureau works for the creditor not for you, so why should you provide it with correct information? Let it investigate the information and verify it with the creditor who submitted it in the first place.

For the credit bureau to work as your credit counselor is really a conflict of interest. Credit bureaus make money by selling information about the consumer, whether it be good or bad. Usually the information sold is not positive. If it were, you would not be reading this material. Therefore, use discretion if you receive a letter from a credit bureau offering you a free counseling session to improve your credit after you have submitted your letters of challenge. Actually, what the credit bureau is attempting to do is to get the answers it needs from you. The more information you provide to it concerning the challenged information, the less it will have to verify with the creditor.

Ssection two

Collection Agencies and Debt Collection Practices

The Fair Debt Collection Practices Act

In 1977 the Congress of the United States adopted the Fair Debt Collection Practices Act in order to protect consumers from vicious and unlawful debt collection practices of collection agencies. At the end of this book is a copy of this act. Every consumer should be familiar with his or her rights and obligations under this act, since most of us are in debt in one form or another.

This section of material will briefly outline some of the practices which are prohibited by the FDCPA but are routinely used by many debt collectors everyday. Until consumers become armed with the knowledge of what their rights are under the law, they will be victimized by the cruel and uncanny practices of the debt collector who engages in illegal debt collection practices.

A number of reasons exist for encouraging consumers, whether clients or participants in a community education effort, to assert their FDCPA rights themselves. If consumers exercise their rights under the Act without the assistance of a lawyer, the lawyers are freed to take cases in which clients are less able to protect themselves. Frequent exercise of consumer rights, coupled with prompt assistance from counsel when consumer efforts are ignored, makes collectors less likely to ignore consumer's assertions of their FDCPA rights and deters collectors from violating the Act. This results in a greater sense of autonomy and power among consumers.

Publication of Lists of Alleged Defaulted Debtors

The FDCPA prohibits the publication of a debtor, deadbeat or shame list in the window of a collection agency or a local newspaper. Only a credit reporting agency or a person with a legitimate business need for the information (i.e., potential employer) may have access to a consumer's credit information [see Section 604(3)].

Sometimes creditors or merchants may display a list of debtors near a cash register or on a bulletin board for public viewing. Such publications are illegal and should be immediately reported to the appropriate consumer protection agency in your area.

Advertising a Debt for Sale to Force Payment

A collector is prohibited from publishing a list of debt for sale, which is an attempt to coerce the debtor to pay the debt in order to avoid his name being placed in the publication.

@SUBHEAD = Telephone Calls Which Harass, Annoy or Abuse

A collector is prohibited from causing a telephone to ring or engaging any person in a conversation repeatedly or continuously with the intent to annoy, abuse or harass any person at the number called. Technically, a collector may telephone your place of residence the day before and the day after the promised payment date. Only persons in the debtor's immediate family may be questioned by the debt collector regarding the debt. Nor should the debt collector call a residence before 7:00 a.m. or after 8:00 p.m. Contacting a debtor's employer <197> calling his or her place of employment when the debt collector has been asked not to by the debtor <197> constitutes an unlawful debt collection practice. This is especially true in the case of a collector contacting a service member's commanding officer in regard to a debt that the command had nothing to do with at the time the service member signed the contract for credit.

If you are a service member and you feel you are being unduly harassed by debt collectors with your command, see your lawyer, or call us at the telephone number inside the front cover of this book, or send us an email and we will be glad to send you specific information concerning your rights as a service member. The Soldier/Sailor Relief Act may give the service member certain rights and advantages that non‑service consumers do not have. Service members may even be exempt from certain types of lawsuits and judgments by creditors and collection agencies. However, most some military lawyers are ignorant of what the consumer credit laws are under this act. Be sure to consult with a consumer advocate agency or an attorney who specializes in consumer law. For instance, as an active duty service member (even active reservist) you cannot be sued or evicted while you are serving your tour of duty. That also extends to the service member’s family under most circumstances.

An Employee of a Collector Must Disclose His/Her Identity

Most collectors use fictitious business names when contacting consumers, but the collector must disclose to the debtor what agency he or she is working for if the debtor inquires. If the consumer (debtor) asks the collector for his or her legal name, that, too, must be disclosed upon request. When a third- party debt collector tells you his/her name, ask them is the name given their legal name, or is it their fictitcious business name. Most debt collectors will pause when asked that question because they will immediately know that they are dealing with a well informed consumer. Some debt collectors will only give you a first name and refuse to further identify themselves. However, they must disclose their identity if you ask them. If they refuse, then request to speak with a supervisor in  order to get the information. Most of the time the collector will hang up on you before you get that far.

Deceptive Threats Prohibited

Oblique threats of lawsuits are made frequently by collectors. Where the threat of suit is oblique, the legal questions are whether the least sophisticated consumer would reasonably construe the threat to be one of suit and whether the threat was deceptive. The threat of suit has been implied from statements such as:

·      The collector would attempt to settle the debt out of court.

·      The debt would be referred to a lawyer.

·      The collector is authorized to proceed with legal action.

·      A complaint and summons is sent to a consumer before filing them.

·      Referring a debt for collection action, taking action to secure payment in full, and the like.

·      A discussion of creditor remedies.

·      Legal matter is enclosed in envelope.

A good rule of thumb is that if it costs more to file an action in court than to write off the debt, the collector may not sue, and is simply making empty threats (which are, of course, unlawful). It would not be prudent, for example, for a collector to spend $1,000.00 in court costs and attorney fees in order to collect a $200.00 debt. You can also make a safe bet that no reputable lawyer would pursue a debt for such a small amount of money.

The collector can, however, use the small claims court to get a judgment for the debt and attempt to enforce the judgment on his own without the assistance of an attorney. But a judgment is still just another form of debt, and illegal debt collection practices cannot be employed to collect judgments or any other type of debt. A collector is further prohibited from filing a lawsuit that is an unreasonable distance from the debtor's residence. For instance, a collector who sends you a letter from Salt Lake City, Utah, concerning a debt that you owe in New Orleans, if you live in New Orleans, cannot file a lawsuit against you in Salt Lake City.

Deceptive for Dunning Letters to Appear to be Telegrams

The Federal Trade Commission has found it to be deceptive for a collector to send dunning letters which simulate the appearance of telegrams because such letters misrepresent the nature, importance, cost, purpose, and urgency of the communication. The use of simulated telegrams also violates the FDCPA.

Contacting or Threatening to Contact Third Parties Prohibited

Employer contacts have been prohibited by the FDCPA and some state laws. The FDCPA also prohibits collectors from threatening to contact employers or most other third parties. Several Federal Trade Commission cases have resulted in agreements by collectors not to misrepresent that they will contact consumers' employers in connection with their collection efforts. Several recent Federal Trade Commission decisions prohibit third party contact altogether.

Misrepresenting Adverse Impact of Nonpayment on Credit Worthiness

Creditors and collection agencies sometimes threaten consumers with adverse credit reports if debts are not paid. Such threats, when not carried out, are deceptive and are a violation of federal and state law. One deceptive tactic is to use a fictitious name to falsely imply that the collector is a credit reporting agency, e.g., Metropolitan Credit Bureau or Capital Credit Reporting Association and is ready to issue adverse credit reports about the consumer.

Some threats are more subtle, such as a letterhead including the statement <169>Your credit rating can only be protected by payment now <170><193>or <Protect your credit. A Judgment in court may harm your credit rating. <170> These statements are deceptive if the collector does nothing to actually affect the consumer's credit rating.

A collector, which was also a credit reporting agency, and which truthfully advised consumers in dunning letters that nonpayment of the debt being collected would be recorded in their credit rating file, nevertheless engaged in a deceptive practice by failing to disclose the material fact that the consumers had rights under the Fair Credit Reporting Act and the Fair Debt Collection Practices Act to review their credit report and obtain deletion, reinvestigation and report of disputed debt.

Misrepresenting that a Claim Has or Will Be Transferred tTo an Attorney or Separate Legal Department

Collectors sometimes attempt to mislead consumers to believe that their collection efforts have entered into a more serious stage by misrepresenting that their claims have been transferred to attorneys or to other departments of the collector's companies. Letters misrepresenting that the account has been transferred to an attorney usually include the attorney's letterhead and often contain explicit threats of legal action. They are deceptive when the decision to send the letters is made without the attorney's supervision. A collector may not send letters purportedly from its own legal department or other designated department when no such department exists.

An attorney who regularly collects debts on behalf of a third party must also abide by the rules of the Fair Debt Collections Practices act. Lawyers, who wrongfully or fraudulently attempt to collect third party debts can also be sued under the FDCPA. If you receive a call from the “legal department” of an agency attempting to collect a debt, ask for the name of the attorney and his/her bar number and the state where the attorney is actually licensed to practice law. Most collection agencies at this point, will simply hang up.

It is important to understand that collection letters (duns) that commonly threathen legal action must be able to take the specific legal action in that particular jurisdiction. For example, if you live in Florida and receive a threatening letter from a collection agency based out of Georgia that is threatening to take legal action against you regarding an alleged debt, contact the State Bar where you live and find out if that agency is licensed to practice law in your jurisdiction. If not, then report the threat with a copy of the letter you received to the State Bar and the Attorney General in your state.

It is unlawful for an attorney to allow a collection agency to his or her name or firm name in collection correcspondence unless the attorney actually employs (owns) or controls that collection agency. Keep in mind that it is an ethical violation for an attorney to be in business with a non-attorney if that business interest or venture has legal implications that requires legal advice, filing pleadings or legal process.

Other practices that are common, but prohibited among collection agencies, are giving consumers the impression they are part of some governmental agency. This misimpression may induce consumers to cooperate with the collectors because they are misled as to the source and purpose of the communication used to obtain their addresses. Many consumers are awed by the power and authority of the government, or they trust and respect the government. The collector's name may create the impression of government affiliation, such as Washington Service Bureau, National or State Capital, State Credit Control Board, or other names similar to those used by governmental agencies.

You as a consumer should be aware that the only collection agency that is truly and duly employed by the government is the IRS (Internal Revenue Service). However, in more recent years and to save costs, the IRS has “contracted with private collection agencies to assist in the collection of small debts under Fifteen Thousand ($15,000) dollars.  Of course these agencies must still comply with the provisions of the FDCPA, but are exempt from some of the other IRS protections granted to taxpayers under the taxpayers bill of rights. For example, if an actual IRS agent (collector) knows that a taxpayer may be entitled to have a debt classified as non-collectible because the taxpayer is insolvent, a contractor working for the IRS does not have to disclose nor offer assistance to the taxpayer to have the debt classified as such.

The IRS contractor will simply push to get the taxpayer to enter into some type of payment or installment agreement, even if it would create a financial hardship for the taxpayer. Actual IRS employees are not permitted to do this. That is why the IRS has sought out the assistance of private collection companies to help collect small debts under $15,000 because it is much easier and legal by bypass and ignore the taxpayers bills of rights.

Private Collection Agencies Used By The Internal Revenue Service

The law requires the IRS to use private agencies to collect certain outstanding, inactive tax debts.

If your tax debt has been transferred to a private collection agency, you will be contacted by one of these four private collection agencies on the government's behalf:

CBE
P.O. Box 2217
Waterloo, IA 50704
800-910-5837

ConServe
P.O. Box 307
Fairport, NY 14450
844-853-4875

Performant
P.O. Box 9045
Pleasanton, CA 94566
844-807-9367

Pioneer
PO Box 500
Horseheads, NY 14845
800-448-3531

• Federal law now allows the IRS to use private debt collectors to hunt down certain delinquent accounts, typically old debts from taxpayers who have been hard to locate.
• If your account is transferred to collections, you’ll get notices in writing from both the IRS and the contracted collector before anyone calls.
• These debt collectors must abide by rules limiting when and how they can call alleged debtors. However, many of them do not comply with the law, so there are still many complaints and problems with the utilization of these private collection companies. You can also request to not work with the private agency.
• IRS debt collectors will never ask to be paid directly. Instead, they will direct you to ways that you can pay the Treasury Dept.

It has been reported that some taxpayers, whose tax debts were assigned to private collection agencies, entered into installment agreements that they are unable to afford, with approximately 43 percent earning income below their allowable living expenses.  An actual IRS employee is prohibited from placing a taxpayer in an installment agreement that is destined to fail, or one that the taxpayer cannot reasonable afford without creating an undue financial hardship. However, the priovate collection agency can simply ignore the IRS policies regarding those limitations placed on actual IRS employees and place the taxpayer in an oppressive and unreasonable financial hardship.

To make matters worse, the program costs the U.S. Treasury more than the money it brings in. Part of the reason may be that the private collection agencies can keep up to 25 percent of what they collect. 

The taxpayers most likely to be contacted by the program's private debt collectors are those identified by the IRS to have an inactive tax receivable. A tax debt is deemed to be "inactive" when the IRS removes it from their active case list for lack of resources or because they cannot locate the individual, or if more than a year has passed since the taxpayer had any interaction with the IRS for the collection of the over-due tax. 

Private collection agencies will always initially demand full payment of the debt. If the taxpayer cannot immediately pay, the agency will then offer an installment agreement. A good rule of thumb, however, is to NEVER agree to a payment or installment that you know you will be unable to fulfill. Even if it is to the IRS. A failed payment agreement may result in the debt being accelerated again and demand for full payment will be sought. However, with the history or failed payment agreements, there is now leverage that the collection agency will use to justify escalating the collection process by using garnishments and levies.

Under well established law and IRS policies, the IRS has to make sure taxpayers have enough money to survive on before it demands tax payments from them. In practice, that means leaving taxpayers up to a few thousand dollars per month to cover basic needs like food, housing, transportation, and healthcare. However, private collectors “have no such obligation or incentive” to inquire about the taxpayer’s finances.

Some unscrupulous debt collectors may even suggest that debtors borrow money or clear out their 401(k) retirement accounts to repay the tax obligation.

In 2017, the collection company Pioneer was sued by the U.S. Government for violating federal consumer financial laws while working on a separate federal government program. The company reportedly “systematically misled consumers” while collecting student loan debt for the government, the Consumer Financial Protection Bureau, an agency created in the aftermath of the 2008 financial crisis, alleges in the suit.

For their part, the four companies say they have no idea whether the people they’re chasing are vulnerable. “[Contractors] do not receive any information about a taxpayer’s level of income and rely solely on voluntary participation by the taxpayer,” Kristin Walter, spokeswoman for the Partnership for Tax Compliance (a coalition representing the four companies), said in an email to Quartz.

“If someone says they can’t pay, even with an extended payment plan, they are removed from the PDC program and their account is referred back to the IRS.” She added that the companies  “abide by a stringent set of rules to ensure taxpayer privacy and protection.”

The odds are against the hired collectors. After three years, a debt is considered statistically uncollectible—and the accounts the IRS assigned to the private collectors were an average of 3.97 years old, TIGTA reports. If you find yourself over extended and owing the IRS, it is better to contact the IRS directly and request that the obligation be placed in an uncollectible status.

Another bit of information concerning deceptive practices: Rigorous enforcement of credit claims against consumers makes a creditor's advertisement of easy credit false and deceptive. Thus, the FTC found that a retailer who regularly garnisheed his low‑income customers' wages and sued 1,600 (about one‑third) of his customers in one year, after regularly extending credit without making a determination of CREDIT WORTHINESS, deceptively advertised easy credit. [Tashof v. FTC, 437 F.2d 707 (D.C. Cir. 1970); Royal Furniture Co., 93 FTC 422 (1979). 27 Me. L. Rev. 1 (1975).]

Right To Stop Collection Contacts

Provision 5.9.2(c) under the FDCPA requires a debt collector to halt its routine collection efforts upon receiving either a written request from the consumer to cease collection efforts or a written refusal to pay the debt. Such a written request should be sent by certified mail, return receipt requested, in order to obtain documentation of the debt collector's receipt of the consumer's instructions. After receiving the notice, the collector may contact the consumer only to advise that its collection efforts are being terminated and that it (or the creditor) intends to invoke specific remedies.

If you feel that your rights as a consumer have been violated or you have been harassed by collection agencies, you should contact the State Consumers Affairs Office in your area and The Federal Trade Commission. Both agencies are listed in the government section of your telephone directory.

What Debt Collectors Don't Want You to Know

Collection agencies make their living by preying on persons who may not be well informed about their rights under the law, or may not know what they can do to stop illegal debt collection practices. A debt collector's nightmare is when a consumer is contacted and knows exactly what to say and how to say it. The truth is you as a consumer don't have to even talk or negotiate with a collection agency. You can hang up and contact the original creditor yourself and explain that you will work out something with them, but not the collection agency.

There are a few things that debt collectors don't want you to know. Some of these ideas are reprinted from NOLO NEWS (John Barnes, 1994 summer issue).

The more you pay the more they earn. Collectors get commissions, usually 30‑50%, on money they bring in, which often doubles or triples their salaries. SoTherefore,  they press the consumer for this big down payment which may very well deepen the cycle of debt. Collectors hoping for a big commission may claim that the boss insists on a big down payment. In fact, blaming it on a mythical manager is designed to deflect your anger away from the collector.

Payment deadlines are phony. Payment deadlines set by collectors are meaningless. They want to create a sense of urgency, because the longer it takes you to pay, the less chance there is of collecting the debt.

If you find that the collector that you are talking with is unreasonable, demand that he or she escalate the call to a manager. However, beware that many unscrupulous collectors will place you on hold and get their buddy in the next cubical to pretend to be a manager and talk to you. A good clue is if the person (“manager”) that comes to the phone is simply reinteratingreiterating what the first collector told you, then you are most likely talking to another zero level “collection specialist” and not an actual manager.

They don't need a financial statement. Collectors claim that they need a financial statement to work out a realistic payment plan for you. You'll notice, however, the information that they ask for bank account numbers, references, place of employment is far more than they need for that purpose. They're fishing for information in order to find you if you move or sue you if you don't repay the debt.

The threats are inflated. Collectors always graphically detail the disastrous consequences of failing to pay a debt. Your credit rating will be ruined, they warn (not mentioning that it is probably already not so good, since a collection company is after you). They may threaten to seize your vehicle and personal possessions and sell them at a public auction. This virturallyvirtually never happens and is even illegal in some states, and also impractical because of the expense. Most collectors may go after only bank accounts or wages following some type of court ordered judgment.

They can find out how much you have in the bank. Through the use of electronic customer service banking, if the collector has your account number and social security number, he or she can simply dial up, and through the automated customer service banking system find out your current account balance. That's why it is imperative that you do not give out more information to a collector than is absolutely necessary.

If you are out of state, they are out of luck. Collectors routinely call out of state debtors and demand payment. Most states require that collection agencies be licensed in the state in which they are collecting debts. But if a creditor has sued you and won, you may be safe from enforcement if you live and work outside of the state where the lawsuit was filed. That's because to collect, the collection agency must transfer the judgment to your state, which is prohibitively time consuming and expensive.

They can't take it all. Certain income, such as social security, pensions, and 75% of your take home pay, is exempt from enforcement action. You can file a claim of exemption from a garnishment of the other 25% of your wages if it would cause you or your family severe hardship.

You can pay student loans on installments. If you are behind on your student loan payments, you can apply for reasonable and affordable payments under the 1992 Higher Education Act. If you can document financial hardship, a collection agency must accept as little as $10.00 per month for at least six months. As long as you make the payments, you are eligible for Title IV Student Aid, and you can continue the payments unless your circumstances change.

If you are a member of the National Guard or Reserves, a law enforcement officer, teacher, nurse, doctor or Peace Corps Volunteer, you can have your student loans forgiven through the United States Department of Education’s William D. Ford Loan Forgiveness Program. There is no fee to sign up, which can be done through the U.S. Department of Education’s website. It generally takes about twelve weeks to get the application fully approved.

How Collectors Find You

Here are some of the common sources of how collection agencies find debtors:

Credit Checks. Your credit file is a wealth of information. To see whether a credit bureau and therefore a collection agency has information on where you work and bank, request a copy from TRWExperian, Trans‑Union or Equifax. (But realize that when you tell the company where to mail your report, that address will make its way into your file.)

Telephone Information. Even if your phone number is unlisted, a collector always checks the address. If you have an unusual name, the collector calls all numbers with that name, looking for a relative. A favorite technique is to leave a message, asking you to call a number collect, the collector accepts the charges and contacts the operator to find out the number you called from. With the prevalence of identity theft and fraud these days, it is amazing at the number of collection agencies that still call and request that consumers verify information over the telephone. NEVER DO THIS! Scammers use this technique very often to get personal information on you to access accounts or to con you into paying debts you do not actually owe. They can also use your information to open other fraudulent accounts or perform fraudulent transactions without your knowledge.

Another way to get rid of a collector is to advise them that you are recording the telephone call. They may tell you that they do not give you permission to record the call, but you should respond that the law does not require their permission, but only that you inform them that the call is being recorded. Isn’t it amazing that when they tell you the call is being recorded, whether you consent or not it’s okay. However, if you do the same, they will hang up on you every time. If you have an android phone, you can down load a call the “call recorder app” for free. It will automatically record every incoming and outgoing telephone call and keep a log of the date, time anmd duration of every call. You can simply delete or mark those numbers you do not want to be recorded in the settings. Apple does not allow the iphone to utilize such technology, so the free call recorder is not available on ios products.

The Post Office. Using a post office box as your mailing address doesn't deter a collection agency. For a small fee, the post office will provide a box holder’s street address if it is available.

Mailing Lists. Most consumers' addresses (and sometimes phone numbers) have been sold to companies that collect mailing lists and sell them to collection agencies.

References. Collectors may call persons you listed as references on a credit application and ask for your phone number. It is's against the law for the collector to lie and say it's a friend calling, so a reference may be able to stop the calls by asking directly Are you a bill collector? Of course, some collectors simply break the law.

Collection agencies also use social media to find you. Many people use social media to update their “status” and list the city and state where they currently reside and even their telephone contact information in many cases. Those that may own businesses will list their business associations with their personal profiles, which give the collection agencies, lawyers and other creditors a good place to start conducting asset check investigations on a consumer. Not saying that most consumer have anything to hide, but every consumer needs to be ever vigilant and aware of how much of their personal and even potentially financially sensitive information that is being shared and collected on social media. For example, a well-intentioned entrepreneur may start a go fund me page to fund a venture or open a small shop or store front. The amount of money that is donated or collected is readily visible and accessible for anyone to see, even your creditors that may be waiting for the opportunity to infringe on your efforts to raise money to engage in your business venture.

The Federal Government Has Its Own Secret Credit Reporting System.

Most consumers have never heard of “CAIVRS.” The federal government's Credit Alert Verification Reporting System (CAIVRS) is a database created by the U.S. Department of Housing and Urban Development (HUD) to track people who have defaulted on federal obligations, including direct or guaranteed federal loans, incurred a federal lien or judgment or have had a claim paid by one of many government agencies. This tracking system is used for other purposes as well that are undisclosed to the public. This is government non-transparency at work using your tax dollars to maintain a process that systematically discriminates against persons based on racial, social and ethnic classes.

If you're sporting this badge of dishonor, you already may have missed out on a home loan. Authorized employees of participating federal agencies access this list of delinquent federal borrowers for the purpose of prescreening loan applicants for credit worthiness. Some lenders such as USAA Mortgage are much more aggressive in utilizing this screening tool than others. Especially when it comes to looking for a reason not lend money to ethic minorities to purchase homes or property.

FHA, VA, USDA loan applicants beware

Approved private lenders acting on the government's behalf can also access CAIVRS to screen applicants for federally-guaranteed loans. If you're applying for an FHA loan, VA loan or USDA loan, this means you.

You won't have access to CAIVRS yourself, but your mortgage lender should check CAIVRS first thing when you apply for a mortgage. The last thing you want is to get loan approval or preapproval, only to get bad news within days of closing that your name was found on the CAIVRS list.

CAIVRS contains data reported by the following agencies:

• Department of Housing and Urban Development

• Department of Veterans Affairs

• Department of Education

• Department of Agriculture

• Small Business Administration

• Federal Deposit Insurance Corporation

• Department of Justice

Notice that the Internal Revenue Service (IRS) is not on this list; it doesn't report to CAIVRS. However, IRS liens are reported to credit bureaus, and IRS installment agreement payments must be disclosed to your lender and included in your debt-to-income ratios.

What to do: Most FHA lenders will want to see a satisfactory payment history (usually 12 months) before approving you for a mortgage, so get current well before you shop for a home. If there is a tax lien, the IRS must agree to subordinate it to the new mortgage.

4. You're on CAIVRS by mistake

Of course, a final possibility is that you're not supposed to be on CAIVRS at all. Perhaps you've satisfied a creditor, or perhaps more than 36 months have gone by since a claim was paid. (You may even have had a claim paid but fall under one of HUD's exceptions that allow you to get an FHA loan despite being on CAIVRS.)

What to do: If you turn up on CAIVRS, your lender is given the name of the agency reporting the default, the case number of the defaulted debt, the type of delinquency (default, claim, foreclosure, lien or judgment), and a telephone number to call for further information or assistance.

Your loan officer can pass this information on to you, and you should contact the reporting agency and clear the error before your scheduled mortgage closing. It's your responsibility to contact the agency yourself and resolve the issue. Your lender cannot delete CAIVRS information, even if you have proof that you are listed in error.

If you're applying for an FHA loan, the FHA also can't help you get off CAIVRS directly. It can neither remove correct CAIVRS information nor alter or delete CAIVRS information reported from other federal agencies.

Certified Mail:

The use of certified mail is essential when dealing with collection agencies and the credit bureaus. Since the time the collection agency and credit bureaus must respond to your letters and inquiries is limited, it is important that you track when your correspondence was received. If the collection agency or credit bureau fails to timely respond, then the negative entry must be removed from the credit report.

Certified Mail Information

•   Certified Mail - $3.345 Fee (All fees are in addition to postage.)

                        Certified Mail provides proof of mailing and delivery of mail. The sender receives a mailing receipt at the time of mailing and a record of delivery is maintained by the Postal Service. A return receipt can also be purchased for an additional fee to provide the sender with proof of delivery. Certified Mail service is only available for First-Class Mail or Priority Mail.  See below for more information about return receipts.  An example of a Certified Mail Receipt is shown below:

•   Return Receipt - $2.75 Fee (Electronic Return Receipt is $1.50)

                        Choose Return Receipt when you want hard copy proof of delivery automatically returned to you. The Return Receipt shows the recipient’s signature and the date and time that your mail piece was delivered. This is commonly used with

                        Certified Mail.  It can also be used for registered mail, insured mail and express items.  An example of how to fill out the return receipt is below:

Section Three

Establishing Credit -A Fresh Start

A Fresh Start

Now that you have learned how to get out of the bad debt trap, it is time to move on to the next logical order of business: how to re‑establish your credit integrity. It is very important however, to realize what got you into trouble in the first place and avoid those pitfalls in the future at all costs.

A good rule of thumb about borrowing money is if it will generate more wealth for you then it is wise to borrow. But if it will only increase your indebtedness, then it is foolish to borrow. For instance, if you borrowed $5,000.00 and had planned to use it to make $10,000.00, that may be wise. But, if you borrow money to go on vacation, or purchase items that are nonessential or not life‑sustaining, then that is foolish. Foolish debt will come back to haunt you every time.

Good credit also saves you money if and whenwhen you do borrow. Most people with bad credit pay double the price for items than people who have maintained good credit. In a real sense it is a penalty for allowing your credit status to fall below an acceptable standard. Most retail outlets that offer easy credit terms to consumers who have a negative credit history are out to take the consumer for a ride. For example, a 19‑inch color television at Sears may cost $189.00 cash. If the consumer at Sears finances the purchase by using a credit card, he may pay a total of $225.00 for the television including interest, which may average about 19 percent.

On the other hand, a consumer without good credit may have to shop at XYZ Retail Outlet. The same brand, make, and model of the 19‑inch color television set is sold here also, but it has been marked up to $299.00  cash00 cash price. But wait a minute, you can finance it at 27 percent and over a period of timed payments, you have paid a whopping $470.00 for the same $189.00 retail value television at Sears.

Another credit counselor told this story of a couple for a more visual illustration:

Mike and Sarah were new to the credit world when they decided to purchase a 19‑inch color television set. They found that most stores carried the same brand name set for a suggested retail price of $349.00, but neither Sarah nor Mike knew how to go about establishing credit. However, a local merchant who called himself Honest Joe made a fast‑talking TV sales pitch many times a day in which he offered credit to anyone, just come on down.... This couple thought this would be a good way to get started with credit. Here is the deal they were offered:

 1955‑inch Color TV Sale                  $499.00

(This same brand is selling for $349.00 at other stores)

Down Payment                       $250.00

Insurance                                $31.00

Loan Fee or Service Charge      $25.00        $25.00

Total Due After Down Payment $249.00

         31.00

25.00

$305.00

 At 22% APR (annual percentage rate)=$67.10 in interest

12 easy payments = ($305 + $67.10) 12 = $31.01

per month

Total amount being paid:

         $250.00       down payment

         249.00        amount remaining

         insurance

         25.00 loan fee or service charge

         67.10 interest

         $622.10       AMOUNT PAID FOR TV

Actual cost of financing TV = $622.10 ‑ $499.00 = $123.10

The saddest part of this whole example is, while many people think dealing with Honest Joe is a good way to establish credit, the truth is most all legitimate creditors do not even value or recognize the credit granted by the Honest Joes in the world. The consumer should avoid, at all cost, trying to establish credit by using these means. Rent‑to‑own furniture and appliances are nothing but rip‑off shops to the consumers with poor credit ratings. Rather than enriching and encouraging these con artists of easy rentals, why not do something about your own credit profile, which will carry greater advantages for credit deals in the future?

There are several things that creditors look for on a credit application to determine your credit worthiness. Since your potential creditor will want to investigate these factors thoroughly, it is important that you fill the credit application out correctly when applying for the first time. These are among the key items creditors look for:

Length of Employment. Creditors like to see at least one year on the job. A top rating is given for seven years or more. Two to five years is better and will get you much farther than just one year on the job. A low rating will be given for persons who change jobs often, more than twice in one year is negative. The type of work you do is also important. The best credit risks tend to be those individuals whose occupations place them in a higher income bracket. When you apply for credit, be sure to describe your job with the most impressive title possible: assembly technician rather than factory worker, senior counselor rather than simply advisor.

Amount of take‑home pay. Your take‑home pay must appear to be adequate to support reasonable living expenses and still allow for paying off credit commitments. An individual earning $400.00 or more per week will receive a top rating; lesser incomes will receive a considerably lower rating.

Length of residence in the area where you are applying for credit. You will receive a maximum rating for owning your home; if you rent an apartment or live with a relative, your rating will be considerably lower. The lowest type of rating is given to people who rent a room or live in a mobile home. Stability is the key factor a creditor is looking for when reviewing the type and length of residence. Five years or more in residence at any location is positive because it is a good sign of stability.

Time at present address. When creditors look for stability in living arrangements, they consider over two moves in one year to be a negative factor.

Relatives living in the area. This indicates that you are less likely to move away from the area.

Your job and the type of work you do. Permanent positions are considered positive, whereas seasonal and temporary jobs are rated negatively. (Your creditor's assurance of payment lies in the stability of your employment.)

Marital Status. Being married or widowed identifies you as being stable. Single and divorced females are usually rated higher than males because they tend to be more dependable and responsible about credit. If you are divorced, a creditor may be more favorable if several years have gone by since the split. Divorced eight years ago is much better than divorced last year.

Assets. You will receive top points if you have both a savings and a checking account. If, however, you have only one of these, a savings account is more desirable because it indicates that you have available assets and ability to pay your debts.

Established credit. What kind of credit references do you already have established? To get a high score you should have two gas credit cards or two department store charge cards. As stated earlier the best type of credit card is a bank card, such as Citibank Visa, or American Express. Credit established at places that grant credit to anyone or easy credit (no questions asked) is considered undesirable and will usually be discounted.

An impersonal factor that may affect your being granted credit is the state of the economy and the soaring inflation rate. Therefore, you will do well as a consumer to establish and maintain the best and most intact credit profile as possible.

Where To Apply for Credit

The best credit in the world is bank credit. It is deemed legitimate and is widely accepted everywhere. Even smaller loan companies and credit unions will identify you as a good credit risk if you have established and well maintained bank credit.

Opening a checking or savings account in your own name is a good and simple way to begin a credit history. Then, when you take the next step (usually after about six months) and submit a bankcard application, your accounts will be checked for positive maintenance, which means you have made periodic deposits and have no overdrawn checks. This is a basic indication of your credit worthiness.

Remember that banks and most financial institutions use the six‑month rule. They will consider that you have established a good credit history pattern after about six months. Therefore, it is very important when you are re‑establishing credit, or starting out for the first time, that your first six months to one year be flawless when it comes to making payments on time, and avoiding overdraft checks.

Another opportunity to establish credit is through your telephone and utility payments. These are usually in your own name, and will tell a potential creditor about the promptness and the amounts of the payments. This information is utilized by creditors to analyze your ability to pay bills.

Retail stores are excellent sources to get a good start in getting re‑established once the negatives of your credit history are gone. These establishments are usually eager to grant credit to consumers because they want customers who will patronize their stores. J.C. Penney’s, The May CompanyWal-Mart and Montgomery WardTarget will usually start consumers out who are trying to establish credit with a small credit limit ($3100.00 ‑ $5200.00) and gradually increase the limit as the consumer demonstrates promptness and ability to pay. K&B DrugBest Buy stores now offer a line of credit to consumers, and it may be fairly easy to obtain. Oil companies such as Unocal, Shell and Texaco are also good credit card companies to start with when it comes to establishing credit.

@SUBHEAD = The Rating Categories

Using the following point system will allow you to determine fairly accurately what your credit rating is.

OCCUPATION

Category A ‑ 10 points                    Category D ‑ 7 points

Business Executives                                  Clergy

Senior Military Officers                    Nurses

Doctors                                           Government Officials

Dentists                                           Skilled Factory Workers

Architects

Category B ‑ 9 points                               Category E ‑ 6 points

Professors    Lawyers                        Sanitation Workers

Engineers    Police Officers               Fire Fighters

Postal Employees  Fire Fighters

                                                      Civil Service Clerks        Sanitation Workers

                                                      Construction Workers

                                                      Truck and Bus Drivers

                                                      Military Personnel

Category C ‑ 8 points                       Category F ‑ 5 points

Farmers                                               Authors

Carpenters                                           Professional Athletes

Railway & Utility Workers                          Dancers and Singers

Postgraduate Students      Established Actors

@HALF LINE =

@HALF LINE =

@CATEGORY = Category G ‑ 4 points                      Category I ‑ 2 points

@CATEGORY = Barbers                                                        Domestic Help

@CATEGORY = Custodians                                                    House Painters

@CATEGORY = Masons                                                        Musicians

@CATEGORY = Unskilled Factory Workers                          Waitresses/Waiters

@CATEGORY = Category H ‑ 3 points                      Category J ‑ 1 point

@CATEGORY = Bartenders                                        Migratory Workers

@CATEGORY = Lawn and Garden Caretakers                       House to House Salespersons

@CATEGORY = Mechanics                                        Cab Drivers

@CATEGORY = Appliance Repairpersons                    Bus Boys

Job Tenure                                     Marital Status

7 years or more = 7pts                       Married/Widowed = 6

2‑5 years = 5pts                                Single Female = 4

2 years or less = 2pts                                  Single Male = 3

                                                      Divorced Female = 2

                                                      Divorced Male = 1

Residence

Own = 6 pts         

Rent Apt. = 3pts

Rent Room = 1pt

Trailer = 1pt

5 years or more at residence = 6pts

On this point system a total of 25 points or more will put you in a good credit risk status. The more points you have the better your chances are of being approved.

@SUBHEAD = Establishing Bank Credit

Another way to establish excellent bank credit is to open several accounts with different banks. In order to carry this plan out you will need to be employed or at least have a stable and reliable income. You will need about $5,0001,000.00 to get started. Here is how it works:

Choose three banks that you might be interested in doing business with. The larger the bank, the more likely they will work with you to establish your credit. Some examples of banks that have offered assistance to customers to build credit are Wells Fargo; Bank of America; Bank of the West; U.S. Bank and Chase. However, there are other good community banks to choose from if you do not have any major banks in your area. @SPACE =

@BODY # = 1.<_><%‑2>Go to bank #1 and open a savings account for $501,000.00. The type of account is important because you want to have your money made available to you at anytime. Therefore, the type of savings account you should request is a same day deposit, same day withdrawal account. Some banks may refer to this type of account by a different name, so ask for the account that will allow you to withdraw money out of the a<%0>ccount that is borrowed against, without having to repay the entire loan off before the money is available.

@BODY # = 2.<_>Wait about one week or so and th<%‑2>en return to bank #1 and request to take out a $7005000.00 loan against your savings account. You will not be refused this type of loan because you are using the best collateral in the world,  <197> cash. You may want to let the loan officer know that you want the loan in order to help you to establish credit. If you use your savings account as collateral, the bank may not even pull a credit report on you because their money is secured by your cash collateral already on deposit with their bankyour cash collateral already on deposit with their bank secures their money. The reason you will have to start with at least $5,000.00 is because the lending rules for most banks have changed. If you go to the bank and ask to borrow, let’s say, $2,500, the bank will tell you to apply for a credit card. A credit card is NOT bank credit.

<%0>

@BODY # = 3.<_>Upon receiving the $700.005,000.00 loan from bank #1, go and open the same type of savings account at bank #2 using the $700.005,000.00 from bank #1 for the deposit. Then do the same thing for bank #3.

@BODY # = 4.<_>After you have opened these three savings accounts (approximately one week apart) open a fourth account with bank A CREDIT UNION #4, but this time make it a checking account. Now, you are going to ask the credit union for a RESERVE CHECKING account with a compensating balance of ten percent (10%). Use the money borrowed from bank #3 to open this checking account. By this time the first payment for the loan from bank #1 should be about a week to ten days away. These two types of accounts are not commonly given, so you have to specifically request them.

@SPACE =

After opening the checking account, wait until you receive your printed checks, and then write checks for payment on the loans at the other three banks. Wait about two weeks and make your second loan payments at all three banks again. After you have made these payments, the amount of money that you have paid back into the savings should now be available for your withdrawal from all three savings accounts. Withdraw the amount of money that is available from each of the savings accounts every two weeks and deposit it into the reserve checking account at the Credit Union so that you will have the funds available to continue to make the payments to the three savings accounts from the checking.

Banks will establish your pattern of payments and give you a credit rating after six payments. Note that most payments are set up on a monthly basis as yours will be, but instead of paying it by the month, tender the payments bi‑weekly. This will establish your credit worthiness with the bank more quickly, and the bank will consider you an excellent customer because not only do you pay your bills on time, butbut also you make double payments. You will also save on the interest that is being charged on the loan against the savings account by prepaying the principal on the loan balance for the next month with the second bi-weekly payment. For instance, make the regular loan payment on the 3rd of July and then on the 17th, make a second payment on the loan, but tell the bank you want to prepay the principal for August. The bank cannot charge interest on money that has not been used for at least thirty (30) days. This is utilizing the principle of compound interest. Bank use it to make money from consumers, but you can also use the same principle to save money against the banks. This can also be done on automobile and mortgage loans. By prepaying the principle for the next month, you can pay a thirty (30) year mortgage off in a little over twelve years without making double payments.

This is important because banks make their money on a principle called compound interest. When the bank sets up your monthly payments on the loan, look at the promissory note or amortization schedule. The principal payment is combined with the interest. Therefore, if you make a regular payment on the 1st of the month on the loan, wait two weeks and make a pre-payment on the principal for the next month. For example, make June’s payment on June 1st, but then prepay the principle for July on June 15th. By prepaying the principal with a separate check you will avoid the interest payment for July’s payment because interest can only be charged on money that has been used for 30 days. This will offset the amount of interest you will be paying on the loans, because you will avoid most of the interest. Remember, the saving accounts and reserve checking accounts will also be paying you a small interest dividend that will also offset the interest you are charged for the loan to establish the credit.

After you have repaid all of your saving accounts loans, your checking those accounts will be depleted. The original $5000.00 that you opened the savings account with to build this bank credit is now safety in your reserved checking account. This type of credit building takes strict discipline not to spend the money from the accounts that you are using to establish your credit. d unless you deposited your paychecks into the account as well. The point of it all is that now you have established credit with three different banks with an excellent payment history. Now when you go back for a loan for larger sums of money, you can use the other two banks as references, and the bank from where you request the loan will also have a record of your excellent ability to repay loans quickly. The best news of all is that after you have established yourself in this manner, you will not have to use a savings account as collateral again because you have established the best credit in the world - <197> bank credit. Now you will be eligible to make unsecured loans to fund a business or project. Keep in mind that a good rule of thumb is not to spend a dollar on a project or investment unless it will make you three dollars back.

How it is Done

So now that you have established major bank credit with three banks, you want to go back to the first bank and start this same process over again. However, this time, you will not be using a secured loan through your savings account. You have just demonstrated to the bank that you are able to pay off a loan fairly quickly with timely payments. Now when you go back to the bank, you asked for a Twenty-Five Thousand Dollar signature loan. The bank will look at its previous loan history with you and you are also going to uses the other two banks that you paid off through the saving method to build credit as credit references.

Go to all three banks on the same day and request a $25,000 loan from each using each bank as a credit reference for the others. In a few days you will have a total of $75,000 to deposit in the Credit Union account with the original $5,000 which, will give you $80,000 in cash in the Credit Union account.

Now you go to the manager of the credit union and tell them you want to activate your ten percent compensating balance (some may refer to it as a line of credit). Because you have established major bank credit with three banks, you use each of them as a credit reference with the credit union. The credit union will have you sign an affidavit that you will always maintain a balance above the $80,000, which represents 10% of your total line of credit of which you will be approved. The credit union will give you a checkbook, and an account with a line of credit for $800,000.00, which is the $80,000 ten percent represents. Now, you never have to go back to the bank to borrow money to invest in a business or real estate, all you have to do is write yourself a check.

You will use the exact same method, as you did to build your credit using the $5,000 with the three banks from the reserve checking account to repay each of the $25,000 loans to each bank. Remember to prepay the principle to eliminate the interest. The reserve checking account is also an interest bearing account that will actually offset any interest you do end up paying on the other loans. Take your time repaying the $25,000 loans (at least six months) so you can build a good repayment and banking history repaying large amounts of cash. Once the loans balances are zero, you will have your reserve checking balance available to use for any business investments.

@SUBHEAD = Secured Credit Cards

There is yet another way to re‑establish credit, or establish credit for the first time if you do not have the cash available to save on a larger scale and establish credit with three banks at once. Although this is the most ideal method of establishing bank credit, it may not be possible for those who find it difficult to save more than $1,000.00 at a time.

Secured Visa and Master Cards are a good way to establish a credit history and may be the vehicle of establishing credit that will put you into the discipline of starting and maintaining a savings account and paying your obligations on time. Your local library will have material on file with a list of banks that offer secured lines of credit.

With a secured credit card you are required to open a savings account with the bank that is offering the line of credit. The amount of your deposit will determine what your credit limit will be. For example, if you open the savings account with $300.00, then your credit limit on the Visa or MasterCard will be $300.00. Most banks that offer this service have a minimum deposit amount, usually about $300.00. Some banks will allow the account to be established with as little as $200.00. You can always increase the amount of money in the savings, which will of course raise your credit limit.

The advantages to this method are many. You will be able to use this <169>major credit card<170> to establish other lines of credit once you have established a credit history with the bank. Most other credit card companies will instantly grant you credit and give you one of their credit cards if you have a major bank credit card already. It doesn't make sense, but that is the way the system is set up. If you already have a major credit card that is widely accepted at most retailers, other creditors will compete for you to open an individual line of credit with their store. Retailers figure that if the bank considers you a good credit risk, so can they.

Another advantage is that with most banks, if you maintain a good payment history for twelve consecutive months or more without missing or being late with payments, the credit card converts to a regular line of credit, and the savings account is no longer needed as collateral once you have established that you are a good credit risk. The regular line of credit usually starts at about $1,500.00, but it varies from bank to bank. What's interesting is that usually there is no inquiry into whether your VISA or MasterCard is secured or not. A major credit card is a major credit card to most retailers.

The disadvantage to this method for establishing credit is that there is usually a one‑time processing fee (usually $60.00 $80.00), as well as an annual fee for maintaining the credit card ($35.00 - $50.00 per year). A wise move would be to use the secured credit card to get things started, but once you have established yourself, apply for a regular credit card at a local bank that does not charge an annual credit card maintenance fee.

These techniques have been tried and proven. If you set some goals and take your time, you will be on your way to financial freedom once again or for the first time.

Resident Banks Offering Secured Credit Cards

United Savings Bank of America

130 Montgomery Street

San Francisco, CA 94104

 (415) 392‑5400/(415) 957‑9555

#1: Navy Federal Credit Union rewards Secured Card

The APR is a variable 8.99 percent, you get one point for every dollar spent, and there’s no annual fee. The downside, though, is that to be eligible for this card, you have been in the military or related to someone who is. By the way, one of my awesome readers pointed out that the interest rate could vary based on your credit score so keep that in mind.

Credit bureaus: Reports as unsecured.

#2: SDFCU Savings Secured Visa Platinum Card

You get a variable rate of 6.99 percent, which is spectacular for this category.  There’s also a rewards program. You get 1 Flex point for every dollar spent. There’s no annual fee and it also comes with a chip.

Credit bureaus: Reports as secured.

#3: USAA Secured Credit Cards

You get a variable rate of 9.9 percent, which is almost as awesome as the APR for the top-rated Navy Federal card. Unfortunately, it shares the same downside. To be eligible for this card, you have been in the military or related to someone who is.

Credit bureaus: Reports as unsecured.

#4: Discover it Secured Credit Card

What I like about it: You get the same rewards as the unsecured version and there’s no annual fee. The rate is a little high. You get a variable 22.99 percent APR. Don’t carry a balance, though, and you can get rewards while rebuilding credit.

Credit bureaus: Reports as unsecured.

#5: Citi Secured MasterCard

Citibank invests your deposit in an 18-month Certificate of Deposit (CD) savings account. You’ll earn 1.01 APY (annual percentage yield) on your deposit. You get a variable rate of 18.24 percent. The annual fee is $29 per year. You have to apply in person at a branch.

Credit bureaus: Reports as secured.

#6: Capital One Secured MasterCard Credit Card

You get a variable rate of 22.9 percent. The annual fee is $29 per year. Capital One doesn’t charge foreign transaction fees so if you have bad (or limited) credit and you need to travel overseas in the near future, this is a very good choice.

Credit bureaus: Reports as unsecured.

#7: Wells Fargo Secured Card

You get a variable rate of 18.99 percent. The annual fee is $25 per year. If you use the card responsibly, you’ll be considered for an unsecured credit card.

Credit bureaus: Reports as secured.

#8: BankAmerica Secured Visa Credit Card

You get a variable rate of 20.24 percent. The annual fee is $39 per year. If you use the card responsibly, you’ll be considered for an unsecured credit card.

Credit bureaus: Reports as secured.

#9: U.S. Bank Secured Visa Card

You get a variable rate of 20.99 percent. The annual fee is $35 per year. After 12 months of responsible use, you’ll be considered for an unsecured credit card.

Credit bureaus: Reports as secured.

#10: DCU Visa Platinum Secured Credit Card

You get a variable rate of 11.50 percent. Not bad! There’s no annual fee. After your credit history and score improve, you’ll be considered for an unsecured credit card. But there’s not a set timetable for that.

Credit bureaus: Reports as secured.

#11: AeroMexico Visa Secured Card

This card is also issued by U.S. Bank. I don’t usually rank a branded card this high, but the APR is a variable 16.24 percent. The annual fee is $25, but waived for the first year. And you actually get rewards.

Credit bureaus: Reports as secured.

#12: Harley-Davidson Visa Secured Credit Card

Here’s another card issued by U.S. Bank. Even if you aren’t a biker, you might like this card. The APR is a variable 22.99 percent. The annual fee is zero. Don’t carry a balance and the cost of this card is zero.

Credit bureaus: Reports as secured.

#13: First National Bank Secured Visa Card Review

First Bankcard issues this card, which is a division of the First National Bank of Omaha. You get a variable 17.99 percent APR and you earn a little interest on your deposit. Moving to an unsecured card in a year or so is a possibility.

#14: Union Bank Secured Visa Card

You get a variable APR of 17.99 percent, which is a pretty good rate for this category. The annual fee is $19. The issuer has told me that if you use the card responsibly, you might be able to graduate to an unsecured credit card with Union Bank.

Credit bureaus: Reports as secured.

The Middle 

#15: primor Secured Visa Classic Card

You get a fixed rate of 13.99 percent and the annual fee for the classic card is $39. There’s also a primor Secured Visa Gold Card version and it has a 9.99 percent fixed rate and a $49 annual fee. The issuer claims guaranteed approval if your monthly income exceeds your expenses by at least $100.

#16: Merrick Bank’s Secured Visa Card

You get a variable rate of 17.45 percent. This is a pretty good rate for this category. There isn’t a process for graduating to an unsecured card. But with responsible card use, you might be offered a chance to apply for an unsecured card with Merrick Bank.

#17: SunTrust Secured Card

SunTrust just recently started offering secured credit cards. You get a variable APR between 17.99 percent and 19.99 percent. An upgrade to an unsecured card isn’t automatic, but you can make the request after you’ve used the secured card responsibly. No time frame was given, but expect at least a year.

Note: First Progress offers three secured credit cards. They all sit at about a #14, but I’ve ranked the cards in a 1-2-3 order. The downside is that they put a 10-day hold on your payment, which can create confusion about how much available credit you have. But for anyone who can’t get approved for a top-tier card, these secured cards aren’t too bad at all.

#18-1: First Progress Platinum Elite MasterCard Secured Credit Card 

You get a variable rate of 19.99 percent, which isn’t too bad for a secured credit card. The annual fee is only $29. Since you shouldn’t carry a balance anyway, I’ve ranked this card highest because it has the lowest annual fee.

Credit bureaus: Reports as unsecured.

#18-2: First Progress Platinum Prestige MasterCard Secured Credit Card 

You get a variable rate of 11.99 percent, which is very good for a secured credit card. The annual fee is $44. I don’t want you to carry a balance, but if you think you can’t avoid it, this would be the best pick of the First Progress cards.

Credit bureaus: Reports as unsecured.

#18-3: First Progress Platinum Select Secured MasterCard Credit Card

The APR is a variable 14.99 percent, which is very good. The annual fee is $39 per year.

Credit bureaus: Reports as unsecured.

#21: Open Sky Secured Credit Card

You get a variable rate of 17.50 percent and the annual fee is $29 per year. The issuer recently added a 25-day grace period. Reports to all three major credit bureaus. No credit check.

Credit bureaus: Reports as unsecured.

The Bottom

#22: First PREMIER Bank Secured Credit Card

You get a 19.9 percent APR, which isn’t bad for a secured card. But there are so many other fees to worry about; it’s not worth it. And you definitely don’t want to move up to this bank’s unsecured credit card, which has a 36 percent APR.

#23: 3-way tie for last place: The Verve Credit Card, The Matrix MasterCard (formerly The Matrix Discover Credit Card) and Continental Finance Cerulean Discover Credit Card (currently unavailable)

These cards are similar, although the fees and rates for the Verve card differ a little from the Matrix and the Cerulean. These are all hybrid cards, so there are three versions: secured, partially secured, and unsecured credit cards. The current state of these cards is confusing, but I’ll attempt to explain it!

The Matrix Discover credit card portfolio was purchased by Mid-America Bank & Trust, who is now the new issuer. MasterCard, instead of Discover, now handles the payment processing. These cards have been converted to the Matrix MasterCard, but they are still serviced by Continental Finance.

It’s not clear to me how you apply for these cards because the websites still show cards flashing the Discover logos. I’ll make it easy for you. Don’t bother with these cards. I’m including them here because I get questions about them and I want to keep you informed.

The fees are bad, people. According to a letter sent from the new issuer to one of my readers, none of the original rates and fees have changed for the Matrix. The APR for these cards is a variable 29.9 percent, which is ridiculously high. You get a $300 credit limit, but a $75 annual fee is removed right off the bat, so your real credit limit is only $225. Oh yeah, and there’s a $144 annual maintenance fee, which is waived for the first year.

VISA/ RESIDENT ONLY

Shoreline Savings

12360 Lake City Way, N.E.

Seattle, WA 98125,

 (206) 367‑0300

RESIDENT ONLY

East‑west Federal Savings & Loan

935 Broadway

Los Angeles, CA 90012

 (213) 489‑5300

RESIDENT ONLY

First Mutual Savings Bank

10430 N.E. 8th St.

Bellevue, WA 98004

 (206) 455‑7317/(206) 455‑7340

Global Oriental Savings & Loan

3109 W. Olympic Blvd.

Los Angeles, CA 90006

 (213) 739‑0633

RESIDENT ONLY

Northbay Savings & Loan Association

20 Petaluma Blvd.

Petaluma, CA 94952

 (707) 763‑2412/(707) 778‑3300

75% credit line for savings $3,000

RESIDENT ONLYAlaska Federal Savings & Loan

311 N. Franklin Street

Juneau, AK 99801

 (907) 586‑1015/ (907) 789‑4844

RESIDENT ONLY

Amador Valley Savings & Loan

235 Main Street

Pleasanton, CA 94566

 (415) 462‑7200

@BANK‑BODY = RESIDENT ONLY

@BANKS‑L = City Federal Savings and Loan Association

@BANK‑BODY = East Jersey at Jefferson

@BANK‑BODY = Elizabeth, NJ 07201

@HEADING2 = Banks with Low Credit Card Rates

@SUBHEAD2 = <F46470P8M>Some banks restrict credit card application to residents in their region.<F255P255D>

@BANKS‑L = The Bank of New England

@BANK‑BODY = Boston, MA

@BANK‑BODY = (617) 742‑4000

@BANK‑BODY = Interest Rate: VISA ‑ 15.72% MasterCard ‑ 15.72%

@BANK‑BODY = Annual Fee: $21

@BANK‑BODY = Grace Period: 25 days

@BANKS‑L = Apple Bank for Savings

@BANK‑BODY = New York, NY

@BANK‑BODY = (516) 496‑1000

@BANK‑BODY = Interest Rate: 15.8%

@BANK‑BODY = Annual Fee: $20

@BANK‑BODY = Grace Period: 25 DAYS

@BANKS‑L = State Street Bank

@BANK‑BODY = Quincy, MA

@BANK‑BODY = (617) 786‑3000

@BANK‑BODY = Interest Rate: 16.5%

@BANK‑BODY = Annual Fee: $25

@BANK‑BODY = Grace Period: 20‑22 days

@BANKS‑L = Shawmut Bank of Boston

@BANK‑BODY = Boston, MA

@BANK‑BODY = (617) 292‑2000/ (800) 431‑4011

@BANK‑BODY = Interest Rate: 15.84%

@BANK‑BODY = Annual Fee: $24

@BANK‑BODY = Grace Period: 25 days

@BANKS‑L = Connecticut Bank and Trust

@BANK‑BODY = P.O. Box 41

@BANK‑BODY = Fairfield, CT

@BANK‑BODY = (800) 243‑5952

@BANK‑BODY = Interest Rate: VISA and MasterCard ‑ 15%

@BANK‑BODY = Annual Fee: $25

@BANK‑BODY = Grace Period: 25 days

@BANKS‑L = Bank Leumi

@BANK‑BODY = New York, NY

@BANK‑BODY = (212) 382‑4000

@BANK‑BODY = Interest Rate: VISA and MasterCard ‑ 16.8%

@BANK‑BODY = Annual Fee: $20

@BANK‑BODY = Grace Period: 25 days

@BANKS‑L = Bank of Hoven

@BANK‑BODY = Service One Card Center

@BANK‑BODY = P.O. Box 5117

@BANK‑BODY = Sioux Falls, SD 57117‑9642

@BANK‑BODY = Interest Rate: 21%

@BANK‑BODY = Annual Fee: $39

@BANK‑BODY = Grace Period: 25 days

@BANKS‑L = First Deposit National Bank

@BANK‑BODY = P.O. Box 800

@BANK‑BODY = Tilton, NH 03276‑0800

@BANK‑BODY = (800) 356‑0107

@BANK‑BODY = Interest Rate: 19.8%

@BANK‑BODY = Annual Fee: $35

@BANK‑BODY = No Grace Period

@BANKS‑L = Sterling Bank and Trust

@BANK‑BODY = (call for the 800 number)

@BODY ‑L =

@SECTION = section four

@SECTIONHD = Sample Letters and Form Letters

@PAGE =

@HEADING2 = SAMPLE LETTER #1

@HEADING2A = To Request A Credit Report <197>

You Were Denied Credit

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER‑RT =

@LETTER = DATE:

@LETTER = CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Request for credit report.

@LETTER =

@LETTER = To Whom It May Concern:

@LETTER = Please produce a credit report for the purpose of review and return to:

@LETTER = Name:       Last: First: Middle:

@LETTER = Mailing Address:

@LETTER = Current Address of Residence:

@LETTER = Previous Address of Residence:

@LETTER = Social Security Number:         Date of Birth:

@LETTER = I have not enclosed a fee for the report because I have been turned down for credit in the last 60 days by:

@LINE =            

@LETTER = I certify that I am the person named above and that I am submitting this request for my own review.

@LETTER =

@LETTER = Signed __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #2

@HEADING2A = To Request A Credit Report <197>

You Were NOT Denied Credit

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Request for credit report.

@LETTER =

@LETTER = To Whom It May Concern:

@LETTER = Please produce a credit report for the purpose of review and return to:

@LETTER = Name:       Last: First: Middle:

@LETTER = Mailing Address:

@LETTER = Current Address of Residence:

@LETTER = Previous Address of Residence:

@LETTER = Social Security Number:         Date of Birth:

@LETTER = I enclose the fee of $________ for the above requested credit report.

@LETTER = I certify that I am the person named above and that I am submitting this request for my own review.

@LETTER =

@LETTER = Signed __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #3

@HEADING2A = First Challenge Of A Negative Entry

That Belongs To You

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Submission of dispute and request for verification.

@LETTER =

@LETTER = To Whom It May Concern:

@LETTER = Pursuant to my rights under the Fair Credit Reporting Act I hereby challenge the credit report entry as noted below as it pertains to:

@LETTER = Name:       Last: First: Middle:

@LETTER = Mailing Address:

@LETTER = Current Address of Residence:

@LETTER = Previous Address of Residence:

@LETTER = Social Security Number:         Date of Birth:

@LETTER = Credit Report Date:

@LETTER = Entry I dispute:                    Issued by:

@LETTER = Please return a supplement to the report of the above date stating that you have or have not obtained verification as to the accuracy of the credit report entry in question.

@LETTER = Should verification not be provided you within 30 days I fully expect such entry to be permanently deleted and no mention made of it henceforth.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #4

@HEADING2A = First Challenge Of A Negative Entry

That Does NOT Belong To You

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Request for verification.

@LETTER =

@LETTER = To Whom It May Concern:

@LETTER = I am requesting that the item listed below be immediately investigated. This account does not belong to me.

@LETTER = This credit report does not accurately reflect my true credit history and is therefore extremely injurious to me.

@LETTER = Name:       Last: First: Middle:

@LETTER = Mailing Address:

@LETTER = Current Address of Residence:

@LETTER = Previous Address of Residence:

@LETTER = Social Security Number:         Date of Birth:

@LETTER = Credit Report Date:

@LETTER = The following does not belong to me: Issued by:

@LETTER = Please return a supplement to the report of the above date that reflects the result of your investigation.

@LETTER = Should verification not be provided you within 30 days I fully expect such entry to be permanently deleted and no mention made of it henceforth.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #5

@HEADING2A = Challenge Of A Negative Entry

That Belongs To Your Former Spouse

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Submission of explanation and request for verification.

@LETTER =

@LETTER = To Whom It May Concern:

@LETTER = I am requesting that the item listed below be investigated as this is not my account or inquiry, rather it belongs to my former spouse. I would like it removed to reflect my true and accurate credit history. This inaccuracy is very injurious to my credit history.

@LETTER = Name:       Last: First: Middle:

@LETTER = Mailing Address:

@LETTER = Current Address of Residence:

@LETTER = Previous Address of Residence:

@LETTER = Social Security Number:         Date of Birth:

@LETTER = Credit Report Date:

@LETTER = The following entry belongs to my former spouse to whom I am no longer married. Furthermore, my former spouse caused this negative entry to occur after our legal (________________). Therefore, this entry should be deleted from my credit profile.

@LETTER = Issued by:

@LETTER = Please return a supplement to the report of the above date stating that:

@LETTER = a) you were advised that this entry belongs to my former spouse, and that

@LETTER = b) you have or have not obtained verification as to the accuracy of the credit entry in question.

Should verification not be provided you within 30 days I fully expect such entry to be permanently deleted and no mention made of it henceforth.

Sincerely, __________________________________

@LETTER =

@SUBHEAD = SAMPLE LETTER #5 continued

Challenge Of A Negative Entry

That Belongs To Your Former Spouse

@LETTER =

@LETTER =

@LETTER = Should verification not be provided you within 30 days I fully expect such entry to be permanently deleted and no mention made of it henceforth.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #6

@HEADING2A = Follow Up Letter <197>

Supplemental Reports Have Not Been Sent

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Requested investigation follow up.

@LETTER =

@LETTER = To Whom It May Concern:

@LETTER = On ________ I requested an investigation on an entry that appeared on my credit report. I have not received a response from you. The Fair Credit Reporting Act requires that you respond within a reasonable period of time. Please do so.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #7

@HEADING2A = Second Challenge Of A Negative Entry

That Belongs To You

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = <%‑2>RE: Submission of explanation and request for verification.

<%0>

@LETTER = To Whom It May Concern:

@LETTER = Even though you have conducted an investigation concerning the item below that appeared on my credit report, I am still in disagreement with this entry. This entry is highly injurious to my credit rating and is not true. Please reinvestigate. Please reference my letter submitted to you on _______________ ._.

@LETTER = Furthermore, I would like the names and business addresses of each individual(s) with whom you verified the below, so that I may follow up with this person(s).

@LETTER = Please forward to me an updated credit report after you have conducted your investigation.

@LETTER = My name and address is as follows:

@LETTER = Name:       Last: First: Middle:

@LETTER = Mailing Address:

@LETTER = Current Address of Residence:

@LETTER = Previous Address of Residence:

@LETTER = Social Security Number:         Date of Birth:

@LETTER = Credit Report Date:

@LETTER = I a<%‑2>m still in disagreement with the following report entry::<%0>

@LETTER = Issued by:

@LETTER = Should verification not be provided you within 30 days I fully expect such entry to be permanently deleted and no mention made of it henceforth.

@LETTER = Sincerely, __________________________________

@HEADING2 = SAMPLE LETTER #8

@HEADING2A = Request To Delete Out‑dated Credit Report Entries

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDIT BUREAU NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Request for out‑dated information to be deleted.

@LETTER =

@LETTER = To Whom It May Concern:

@LETTER = Pursuant to my rights under the Fair Credit Reporting Act I hereby request that the out‑dated entry noted below be removed from my credit profile as it pertains to:

@LETTER = Name:       Last: First: Middle:

@LETTER = Mailing Address:

@LETTER = Current Address of Residence:

@LETTER = Previous Address of Residence:

@LETTER = Social Security Number:         Date of Birth:

@LETTER = Credit Report Date:

@LETTER = Out‑dated entry I wish to have removed:

@LETTER = Issued by:

@LETTER = I hereby request that the above entry be deleted from my credit profile pursuant to your policy with regard to the length of time such an entry may remain in a profile.

@LETTER = Please return a supplement to the report of the above date showing that the aforementioned entry has indeed been deleted.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #9

@HEADING2A = Request Creditor To Update Your Credit Report

After Debt Is Paid

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDITOR NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Account Name and Number

@LETTER =

@LETTER = Dear _____________:

@LETTER = My credit rating was adversely affected by your entry to the credit bureau that showed a past due status of my account with you. Since I have satisfied this debt I respectfully request that you submit a statement to the credit bureau that reflects the fact that the debt has been paid in full.

@LETTER = I extend my gratitude in advance for your timely attention to this request.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #10

@HEADING2A = Request Creditor To Update Your Credit Report

After Timely Payments

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE ZIP

@LETTER = DATE:

@LETTER = CREDITOR NAME

STREET

CITY, STATE ZIP

@LETTER = RE: Account Name and Number

@LETTER =

@LETTER = Dear _____________:

@LETTER = My credit rating was adversely affected by your entry to the credit bureau that showed a past due status of my account with you. Since I have paid the past due balance and have made regular payments on this account as agreed, I respectfully request that you submit a statement to the credit bureau that reflects the fact that the account is now in good standing.

@LETTER = I extend my gratitude in advance for your timely attention to this request.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

@HEADING2 = SAMPLE LETTER #11

@HEADING2A = To Collection Agency of Disputed Debt

@LETTER‑RT = YOUR NAME

@LETTER‑RT = ADDRESS

@LETTER‑RT = CITY, STATE, ZIP

@LETTER = DATE:

@LETTER = NAME OF COLLECTION AGENCY

ADDRESS

CITY, STATE, ZIP

@LETTER = RE: Acct#__________________

@LETTER =

@LETTER = Dear Sir:

@LETTER = I recently received a notice from you in which you state I owe $___________ to (Name of Creditor).

@LETTER = I dispute the validity of this debt because (this debt was not incurred.), (doesn't belong to me)... I am presently working with the creditor in order to resolve this matter.

@LETTER = Pursuant to section 809(b) of the Federal Fair Debt Collection Practices Act, until the creditor further verifies or resolves this matter with me, you are prohibited from taking any further actions to collect the debt. (the creditor) will notify you as to the resolution of this matter, and direct you to remove the negative entry from my credit report(s).

@LETTER = Your compliance with this federal law is expected.

@LETTER =

@LETTER = Sincerely, __________________________________

@PAGE =

SAMPLE NEGOTIATION LETTER

NAME

ADDRESS

CITY, STATE, ZIP

DATE:

CREDITOR'S NAME

ADDRESS

CITY, STATE, ZIP

Gentlemen:

As you know, I am presently behind in my payments to you. I have tried my best to repay my debt in a timely manner, but ever since I was laid off from my job and had to accept a job paying minimum wage, my children and I have been barely able to afford rent and grocery bills.

I have spent many hours seeking a second part‑time job to make ends meet but to no avail, and I would like to ask your consent to a repayment plan which is realistic, and which I think I will be able to afford.

My present debt to you is $_______. With your permission, I will send you a check or money order for $_______ each month which I believe I can afford. I honestly think that I will be able to keep up with this modest payment until my situation can improve over the next few months.

Unless I hear from you to the contrary, I will assume that this plan is acceptable to you. As a demonstration of my good faith, a check for $___________ is enclosed with this letter.

My children and I are very grateful to you for your patience and confidence in us. Thank you for your understanding.

Very truly yours, __________________________________

Ssection five

Sample Certified Mail Return Request and Credit Report

Domestic Mail Return Receipt (BACK)

Leave Blank

Leave Blank

Print Credit Bureau's Name and Address

Print Number From Mail Receipt

Mark Certified

Leave Blank

Leave Blank

Leave Blank

Leave Blank

SAMPLE Domestic Mail Return Receipt (FRONT)

This form can be obtained from your local Post Office. Be sure that when you complete this card that you write your return address on the front so that the Post Office can promptly return it to you when delivery is completed.

SAMPLE  Mail Receipt

Complete the top portion of this form with the Credit Bureau's name and address. The Post Office will complete the remainder of the form for you. The cost of sending a first class letter by certified mail return receipt requested is $2.29.

Credit Bureau Information

MAIN OFFICE:    EXPERIAN (Formerly TRW)

P.O. Box  2002

Allen, TX 75013

Phone Numbers:    (714) 991‑5100 Recorded Information

(714) 991‑6000 Assistance with Questions

Report Policy:       No fee if denied credit within the last 60

days. Send statement of denial with report request. An $8.00 fee if NOT denied credit.

@CREDITBUR = MAIN OFFICE:    TRANS UNION CREDIT INFORMATION

P.O. Box 7000

North Olmstead, OH 44070

Trans‑Union

760 Sproul Road

P.O. Box 390

Springfield, PA 19064‑0390

Phone Numbers:    (313) 689‑3888 ( call only if denied credit)

(712) 328‑0300 Council Bluffs

Report Policy:       No fee if denied credit within last 60 days.

Send Statement of denial with report request. An $11.88 fee if NOT denied credit.

MAIN OFFICE:    EQUIFAX / CBI

5505 Peach Tree Dunwoody, Suite 600

Atlanta, GA 30342

Equifax Credit Information Services/CSC

P.O. Box 740241

Atlanta, GA 30374-0241

@CREDITBUR = Phone Numbers:    (800) 685-1111 Assistance with Questions

(800) 231‑6783 Wichita, Kansas Office

(402) 330‑3517 Omaha Office

@CREDITBUR = Report Policy:       No fee if denied credit in last 60 days.

A $15.00 fee if NOT denied credit.

@BODY ‑L = NOTE: <P10D%‑2>Always remember to send all correspondence to credit bureaus by certified mail, return receipt requested. Also make sure that all of your correspondence is handwritten.  From time to time the credit bureaus may change their addresses and phone numbers. Please check the local yellow pages under credit reporting agencies if the numbers listed at the time of this printing have changed.

Your Credit Report

Experian and Equifax have been sued enough times in the recent past that they have been oredered to make credit reports reader friendly for the adverageaverage consumer. Below is a sample of the more simplified report. The earlier versions were written in codes which also had to be interpreted by a reporting agency itself, which was another way to further scam money from the unaware consumer.  It is much easier for a consumer to know exactly where he or she stands with their credit profile

STUDENT LOANS

When placed in default, any William D. Ford Federal Direct Loan (Direct Loan) Program loan or Federal Family Education Loan (FFEL) Program loan that is owned by the U.S. Department of Education (ED) is assigned to ED’s Default Resolution Group for collection. Defaulted FFEL Program loans that are not owned by ED will be assigned to a guaranty agency for collection. For defaulted Federal Perkins Loans, you’ll need to check with the school from which you borrowed to find out about loan repayment.

If you are unsure which type(s) of loan(s) you have, check your original loan documents or log in to My Federal Student Aid. Note that information about any private student loan you may have received will not be included in NSLDS. 

You have several options for getting your loan out of default. These include

•   loan repayment,

•   loan rehabilitation, and

•   loan consolidation.

Loan Repayment

One option for getting out of default is repaying your defaulted student loan in full. Get repayment information for your loan(s) to learn about how to repay and where to send payments:

•   Repayment information for defaulted Direct Loans (includes TEACH Grants that have been converted to Direct Unsubsidized Loans)

•   Repayment information for defaulted FFEL Program loans

•   Repayment information for defaulted Federal Perkins Loans—contact the school where you received your Perkins Loan

top

Loan Rehabilitation

Another option for getting your loan out of default is loan rehabilitation. To rehabilitate your Direct Loan or FFEL Program loan, you and ED must agree on a reasonable and affordable payment plan. (Remember, contact your school for your Perkins Loan.)

Your loan is rehabilitated only after you have voluntarily made the agreed-upon payments on time and the loan has been purchased by a lender. Outstanding collection costs may be added to the principal balance. 

Note: Payments that have already been collected from you—for example, through the Administrative Wage Garnishment (AWG) process or through legal action taken against you to collect your defaulted loan—do not count toward your rehabilitation payments. (Through AWG, payments will be deducted from your wages until your defaulted loan is removed from default status.) 

Once your loan is rehabilitated, you may regain eligibility for benefits that were available on your loan before you defaulted. Those benefits may include deferment, forbearance, a choice of repayment plans, loan forgiveness, and eligibility for additional federal student aid.

Other benefits of loan rehabilitation include the removal of

•   the default status on your defaulted loan,

•   the default status reported to the national credit bureaus,

•   wage garnishment, and 

•   any withholding of your income tax refund made by the Internal Revenue Service (IRS).

After rehabilitation, your monthly payment may be more than the amount you paid while you were rehabilitating your loan. Collection costs may be added to your principal balance, increasing the total amount you owe. Delinquencies (late payments) reported before the loan defaulted will not be removed from your credit report. A defaulted student loan may impact your credit rating.

Loan Consolidation

You also have an option for getting out of default through loan consolidation. Loan consolidation allows you to pay off the outstanding combined balance(s) for one or more federal student loans to create a new single loan with a fixed interest rate.

A defaulted federal student loan may be included in a consolidation loan after you’ve made arrangements with ED and made several voluntary payments (contact your school for information about making payments on a Perkins Loan). Usually, you would be required to make at least three consecutive, voluntary, and on-time payments prior to consolidation.

Note: A guaranty agency may charge collection or late fees up to 18.5 percent of the outstanding loan (including the principal and interest). The fees become part of the principal for the consolidation loan. For example, a defaulted loan of $8,500 plus $1,500 of accrued interest = $10,000. Fees of $1,850 can be added to the $10,000, which means the consolidation loan will be made for $11,850.

Consolidate your loan(s) through a Direct Consolidation Loan.

Default

Failure to repay a loan according to the terms agreed to in the promissory note. For most federal student loans, you will default if you have not made a payment in more than 270 days. You may ...

William D. Ford Federal Direct Loan (Direct Loan) Program

The federal program that provides loans to eligible student and parent borrowers under Title IV of the Higher Education Act.  Funds are provided by the federal government to eligible borrowers...

Direct Loan

A federal student loan, made through the William D. Ford Federal Direct Loan Program, for which eligible students and parents borrow directly from the U.S. Department of Education at participating ...

Federal Family Education Loan (FFEL) Program

Under this program, private lenders provided loans to students that were guaranteed by the federal government. These loans included Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford ...

FFEL Program

Federal Family Education Loan Program

Guaranty Agency

A state agency or a private, nonprofit organization that administers Federal Family Education Loan (FFEL) Program loans.

Lender

The organization that made the loan initially; the lender could be the borrower's school; a bank, credit union, or other lending institution; or the U.S. Department of Education.

Collection Costs

WAGE GARNISHMENTS

Some debt collectors will buy off debts from creditors for less than half of what was owed and then sue you in court to get a judgment for collection. It is extremely important that when you receive a summons to appear in court from a collection agency or law firm, respond to the summons to appear. Check the rules of civil procedure in your jurisdiction to find out if you need to actually respond to the summons in complaint in writing, or simply appear on the court date. If you look at the summons and there is no court date to appear, then you most likely will have to respond to the complaint and file it with the court before a court date will be set. If you fail to respond, then the plaintiff will win by default and the creditor may be able to get an execution of judgment and attach your wages or bank account. Knowing the law in these situations is your best defense or simply hire a competent attorney to handle the matter for you. But whatever you do, do not ignore it.

Learn the federal wage garnishment law and your state’s wage garnishment laws. The best way to prevent wage garnishment actions is to be pro-active when dealing with creditors and debt collectors and to know wage garnishment laws. Federal and state garnishment laws can be used to stop, start and avoid wage garnishment actions by consumers, creditors and collectors. Wage garnishment (except student loans) is only possible after creditors and collectors obtain a court ordered judgment for such action. The garnishment action, otherwise known as “administrative wage garnishment” can be up to 25 percent of your disposable income.

Wage Garnishment rules taken directly from federal law; Title 15, Chapter 41, Subchapter II.

•                  Restriction on garnishments – Section 1673

•                  Restriction on discharge from employment – Section 1674

•                  Exemption for State-regulated garnishments – Section 1675

•                  Enforcement by Secretary of Labor – Section 1676

•                  Effect on State laws – Section 1677

•                  Garnishment of Social Security and Disability Benefits

1.    Sec. 1673: Restriction on garnishment

(a) Maximum allowable garnishment

Except as provided in subsection (b) of this section and in section 1675 of this title, the maximum part of the aggregate disposable earnings of an individual for any work week which is subjected to garnishment may not exceed

(1) 25 per cent of disposable earnings for that week, or

(2) the amount by which disposable earnings for that week exceed thirty times the Federal minimum hourly wage prescribed by section 206(a)(1) of title 29 in effect at the time the earnings are payable, whichever is less.

In the case of earnings for any pay period other than a week, the Secretary of Labor shall by regulation prescribe a multiple of the Federal minimum hourly wage equivalent in effect to that set forth in paragraph (2).

(b) Exceptions

(1) The restrictions of subsection (a) of this section do not apply in the case of

(A) any order for the support of any person issued by a court of competent jurisdiction or in accordance with an administrative procedure, which is established by State law, which affords substantial due process, and which is subject to judicial review.

(B) any order of any court of the United States having jurisdiction over cases under chapter 13 of title 11.

(C) any debt due for any State or Federal tax.

(2) The maximum part of the aggregate disposable earnings of an individual for any workweek which is subject to garnishment to enforce any order for the support of any person shall not exceed –

(A) where such individual is supporting his spouse or dependent child (other than a spouse or child with respect to whose support such order is used), 50 per cent of such individual’s disposable earnings for that week; and

(B) where such individual is not supporting such a spouse or dependent child described in clause (A), 60 per cent of such individual’s disposable earnings for that week; except that, with respect to the disposable earnings of any individual for any workweek, the 50 per cent specified in clause (A) shall be deemed to be 55 per cent and the 60 per cent specified in clause (B) shall be deemed to be 65 per cent, if and to the extent that such earnings are subject to garnishment to enforce a support order with respect to a period which is prior to the twelve-week period which ends with the beginning of such workweek.

(c) Execution or enforcement of garnishment order or process prohibited

No court of the United States or any State, and no State (or officer or agency thereof), may make, execute, or enforce any order or process in violation of this section

2. Sec. 1674: Restriction on discharge from employment by reason of garnishment

(a) Termination of employment :

No employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness.

(b) Penalties :

Whoever willfully violates subsection (a) of this section shall be fined not more than $1,000, or imprisoned not more than one year, or both.

3. Sec. 1675. – Exemption for State-regulated garnishments

The Secretary of Labor may by regulation exempt from the provisions of section 1673(a) and (b)(2) of this title garnishments issued under the laws of any State if he determines that the laws of that State provide restrictions on garnishment which are substantially similar to those provided in section 1673(a) and (b)(2) of this title.

4. Sec. 1676: Enforcement by Secretary of Labor

The Secretary of Labor, acting through the Wage and Hour Division of the Department of Labor, shall enforce the provisions of this subchapter.

5. Sec. 1677. – Effect on State laws

This subchapter does not annul, alter, or affect, or exempt any person from complying with, the laws of any State

(1) prohibiting garnishments or providing for more limited garnishment than are allowed under this subchapter, or

(2) prohibiting the discharge of any employee by reason of the fact that his earnings have been subjected to garnishment for more than one indebtedness.

Social Security and Garnishment:

Generally, Social Security benefits are exempt from execution, levy, attachment, garnishment, or other legal process, or from the operation of any bankruptcy or insolvency law. The exceptions are that benefits are subject:

(1) to the authority of the Secretary of the Treasury to make levies for the collection of delinquent Federal taxes and under certain circumstances delinquent child support payments; and

(2) to garnishment or similar legal process brought by an individual to enforce a child support or alimony obligation.

Section 207 of the Social Security Act provides: “The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.”

However, section 6331 of the Internal Revenue Code of 1954 (26 U.S.C. 6331) which was enacted into law on August 16, 1954, after the enactment of section 207, gives the Secretary of the Treasury the right to levy or seize for collection of delinquent Federal taxes, property, rights to property, whether real or personal, tangible, or intangible and the right to make successive levies and seizures until the amount due, together with all expenses, is fully paid. References: SSR 79-4: SECTIONS 207, 452(b), 459 and 462(f) (42 U.S.C. 407, 652(b), 659 and 662(f)) LEVY AND GARNISHMENT OF BENEFITS 20 CFR 404.970 SSR 79-4.

OTHER THINGS YOU SHOULD KNOW

Are you married and been filing separately because your spouse owes child support or some other financial obligation such as a student loan which is offset? Married filing separately is the worse filing status and you are giving up credits and refunds needlessly. Instead, you should file an INJURED SPOUSE CLAIM and get the maximum refund. Your portion of the refund will not be offset to pay the obligation of a spouse. 

IRS INJURED SPOUSE CLAIMS:

Injured Spouse Claims. If spouses file a joint income tax return and an obligation described in IRC 6402 is owed by one of the spouses, the Service will generally offset the entire overpayment. See Rev. Rul. 84-171. If the injured spouse files a claim for his or her share of the overpayment, the Service is required to refund the portion of the overpayment to which the injured spouse is legally entitled. See IRM 25.15.1.2.5, Relief from Joint and Several Liability-Injured Spouse Claims; 31 CFR 285.2(f) and (g). An injured spouse obtains his or her portion of the overpayment by filing a Form 8379, Injured Spouse Allocation. See IRM 25.15.1.2.5. An injured spouse claim can also be filed with an original return. As will be discussed below, in some circumstances the Service may have the right under IRC 6402 to offset all or part of the community property portion of the overpayment. The interest a liable spouse has in the community property portion of the overpayment varies from state to state. Exhibit 25.18.5-1, contains examples of the application of injured spouse rules in various states and for various types of liabilities.

HEALTH CARE HAS BEEN AFFORDABLE SINCE 1946

DID YOU KNOW….The Affordable Care Act was unnecessary and a burden on taxpayers. The Hill Burton Act of 1946 has never been repealed and provided reduced or free health care to those who were underinsured or unable to pay. 

Hill-Burton Free and Reduced-Cost Health Care

In 1946, Congress passed a law that gave hospitals, nursing homes and other health facilities grants and loans for construction and modernization. In return, they agreed to provide a reasonable volume of services to persons unable to pay and to make their services available to all persons residing in the facility’s area. 

The program stopped providing funds in 1997, but about 140 health care facilities nationwide are still obligated to provide free or reduced-cost care.

Since 1980, more than $6 billion in uncompensated services have been provided to eligible patients through Hill-Burton.

You are eligible to apply for Hill-Burton free care if your income is at or below the current Federal Poverty Guidelines. You may be eligible for Hill-Burton reduced-cost care if your income is as much as two times (triple for nursing home care) the HHS Poverty Guidelines. Facilities may require you to provide documentation that verifies your eligibility, such as proof of income.

Care at Hill-Burton obligated facilities is not automatically free or reduced-cost. You must apply at the admissions or business office at an obligated facility and be found eligible to receive free or reduced-cost care. You may apply before or after you receive care — you may even apply after a bill has been sent to a collection agency.

Only facility costs are covered, not your private doctors' bills.
Some facilities may use different eligibility standards and procedures. They are identified on the Hill-Burton list of obligated facilities as PFCA, CFCA, UACA and 515. Their programs may be called either a free care, charity care, discounted services, indigent care, etc.

Hill-Burton facilities must post a sign in their admissions and business offices and emergency room that notifies the public that free and reduced-cost care is available. When you apply for Hill-Burton care, the obligated facility must provide you with a written statement that tells you what free or reduced-cost care services you will get or why you have been denied.
You may file a complaint with the U.S. Department of Health and Human Services if you believe you have been unfairly denied Hill-Burton free or reduced-cost care. Send complaints to:

Director, Division of Poison Control and Healthcare Facilities
5600 Fishers Lane
Room 8W
Rockville, MD 20857
Email: DFCRCOMM@hrsa.gov

Hill-Burton Facilities Obligated to Provide Free or Reduced-Cost Health Care
Total Obligated Facilities: 141 (11/15/2017)
No Obligated Facilities: Alaska, Delaware, Indiana, Maryland, Minnesota, Nebraska, Nevada, North Dakota, Rhode Island, South Dakota, Utah, Vermont, Wyoming and all the territories except Puerto Rico.

Since driving long distances for services and essentials seems to be the norm for a lot of people, here is a consideration if you really need medical care and cannot afford the insurance. You are paying for it anyway along with a lot of other foolishness that is unnecessary. 

The next section includes a copy of the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. Read, study and know your rights under these federal laws. You cannot assert rights you do not know or understand. Knowing your rights under the FDCPA and FCRA is powerful against unlawful debt collection and unfair credit reporting practices.

@PAGE =

@SECTION = Ssection Ssix

@SECTIONHD = Fair Debt Collection Practices Act

Fair Debt Collection Practices Act

As amended by Public Law 111-203, title X, 124 Stat. 2092 (2010)

As a public service, the staff of the Federal Trade Commission (FTC) has prepared the following complete text of the Fair Debt Collection Practices Act

§§ 1692-1692p.

Please note that the format of the text differs in minor ways from the U.S. Code and West’s U.S. Code Annotated. For example, this version uses FDCPA section numbers in the headings. In addition, the relevant U.S. Code citation is included with each section heading. Although the staff has made every effort to transcribe the statutory material accurately, this compendium is intended as a convenience for the public and not a substitute for the text in the U.S. Code.

Table of Contents
§801.  Short title
§802.  Congressional findings and declaration of purpose
§803.  Definitions
§804.  Acquisition of location information
§805.  Communication in connection with debt collection
§806.  Harassment or abuse
§807.  False or misleading representations
§808.  Unfair practices
§809.  Validation of debts
§810.  Multiple debts
§811.  Legal actions by debt collectors
§812.  Furnishing certain deceptive forms
§813.  Civil liability
§814.  Administrative enforcement
§815.  Reports to Congress by the Bureau; views of other Federal agencies
§816.  Relation to State laws
§817.  Exemption for State regulation
§818. Exception for certain bad check enforcement programs operated by private entities
§819. Effective date

§ 801.  Short Title

This subchapter may be cited as the "Fair Debt Collection Practices Act."

15 USC 1692

§ 802.  Congressional findings and declarations of purpose

(a) Abusive practices
There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.

(b) Inadequacy of laws
Existing laws and procedures for redressing these injuries are inadequate to protect consumers.

(c) Available non-abusive collection methods
Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.

(d) Interstate commerce
Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.

(e) Purposes
It is the purpose of this subchapter to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

15 USC 1692a

§ 803.  Definitions 

As used in this subchapter --

(1) The term "Bureau" means the Bureau of Consumer Financial Protection.

(2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.

(3) The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.

(4) The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

(5) The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

(6) The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 1692f(6) of this title, such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include --

(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;

(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and

(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

(7) The term "location information" means a consumer's place of abode and his telephone number at such place, or his place of employment.

(8) The term "State" means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.

15 USC 1692b

§ 804.  Acquisition of location information

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall --

(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;

(2) not state that such consumer owes any debt;

(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;

(4) not communicate by post card;

(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and

(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector.

15 USC 1692c

§ 805.  Communication in connection with debt collection

(a) Communication with the consumer generally
Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt --

(1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o'clock antemeridian and before 9 o'clock postmeridian, local time at the consumer's location;

(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or

(3) at the consumer's place of employment if the debt collector knows or has reason to know that the consumer's employer prohibits the consumer from receiving such communication.

(b) Communication with third parties
Except as provided in section 1692b of this title, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

(c) Ceasing communication
If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except --

(1) to advise the consumer that the debt collector's further efforts are being terminated;

(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or

(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

If such notice from the consumer is made by mail, notification shall be complete upon receipt.

(d) “Consumer” defined
For the purpose of this section, the term "consumer" includes the consumer's spouse, parent (if the consumer is a minor), guardian, executor, or administrator.

15 USC 1692d

§ 806.  Harassment or abuse 

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.

(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 1681a(f) or 1681b(3)1 of this title.

(4) The advertisement for sale of any debt to coerce payment of the debt.

(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(6) Except as provided in section 1692b of this title, the placement of telephone calls without meaningful disclosure of the caller's identity.

15 USC 1692e

§ 807.  False or misleading representations

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.

(2) The false representation of --

(A) the character, amount, or legal status of any debt; or

(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.

(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.

(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to --

(A) lose any claim or defense to payment of the debt; or

(B) become subject to any practice prohibited by this subchapter.

(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.

(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.

(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.

(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.

(13) The false representation or implication that documents are legal process.

(14) The use of any business, company, or organization name other than the true name of the debt collector's business, company, or organization.

(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.

(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 1681a(f) of this title.

15 USC 1692f

§ 808.  Unfair practices

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector's intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.

(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.

(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.

(5) Causing charges to be made to any person for communications by concealment of the true purpose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if --

(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;

(B) there is no present intention to take possession of the property; or

(C) the property is exempt by law from such dispossession or disablement.

(7) Communicating with a consumer regarding a debt by post card.

(8) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.

15 USC 1692g

§ 809.  Validation of debts

(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing --

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) Disputed debts
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) of this section that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector. Collection activities and communications that do not otherwise violate this subchapter may continue during the 30-day period referred to in subsection (a) unless the consumer has notified the debt collector in writing that the debt, or any portion of the debt, is disputed or that the consumer requests the name and address of the original creditor. Any collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt or request the name and address of the original creditor.

(c) Admission of liability
The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

(d) Legal pleadings
A communication in the form of a formal pleading in a civil action shall not be treated as an initial communication for purposes of subsection (a).

(e) Notice provisions
The sending or delivery of any form or notice which does not relate to the collection of a debt and is expressly required by title 26, title V of Gramm-Leach-Bliley Act [15 U.S.C. 6801 et seq.], or any provision of Federal or State law relating to notice of data security breach or privacy, or any regulation prescribed under any such provision of law, shall not be treated as an initial communication in connection with debt collection for purposes of this section.

15 USC 1692h

§ 810.  Multiple debts

If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer's directions.

15 USC 1692i

§ 811.  Legal actions by debt collectors 

(a) Venue
Any debt collector who brings any legal action on a debt against any consumer shall --

(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity --

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

(b) Authorization of actions
Nothing in this subchapter shall be construed to authorize the bringing of legal actions by debt collectors.

15 USC 1692j

§ 812.  Furnishing certain deceptive forms 

(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 1692k of this title for failure to comply with a provision of this subchapter.

15 USC 1692k

§ 813.  Civil liability 

(a) Amount of damages
Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of --

(1) any actual damage sustained by such person as a result of such failure;

(2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.

(b) Factors considered by court
In determining the amount of liability in any action under subsection (a) of this section, the court shall consider, among other relevant factors --

(1) in any individual action under subsection (a)(2)(A) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or

(2) in any class action under subsection (a)(2)(B) of this section, the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector's noncompliance was intentional.

(c) Intent
A debt collector may not be held liable in any action brought under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) Jurisdiction
An action to enforce any liability created by this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

(e) Advisory opinions of Bureau
No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Bureau, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

15 USC 1692l

§ 814.  Administrative enforcement

(a) Federal Trade Commission
The Federal Trade Commission shall be authorized to enforce compliance with this subchapter, except to the extent that enforcement of the requirements imposed under this subchapter is specifically committed to another Government agency under any of paragraphs (1) through (5) of subsection (b), subject to subtitle B of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5511 et seq.]. For purpose of the exercise by the Federal Trade Commission of its functions and powers under the Federal Trade Commission Act (15 U.S.C. 41 et seq.), a violation of this subchapter shall be deemed an unfair or deceptive act or practice in violation of that Act. All of the functions and powers of the Federal Trade Commission under the Federal Trade Commission Act are available to the Federal Trade Commission to enforce compliance by any person with this subchapter, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests under the Federal Trade Commission Act, including the power to enforce the provisions of this subchapter, in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.

(b) Applicable provisions of law
Subject to subtitle B of the Consumer Financial Protection Act of 2010, compliance with any requirements imposed under this subchapter shall be enforced under--

(1) section 8 of the Federal Deposit Insurance Act [12 U.S.C. 1818], by the appropriate Federal banking agency, as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect to--

(A) national banks, Federal savings associations, and Federal branches and Federal agencies of foreign banks;

(B) member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act [12 U.S.C. 601 et seq., 611 et seq.]; and

(C) banks and State savings associations insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System), and insured State branches of foreign banks;

(2) the Federal Credit Union Act [12 U.S.C. 1751 et seq.], by the Administrator of the National Credit Union Administration with respect to any Federal credit union;

(3) subtitle IV of title 49, by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;

(4) part A of subtitle VII of title 49, by the Secretary of Transportation with respect to any air carrier or any foreign air carrier subject to that part;

(5) the Packers and Stockyards Act, 1921 [7 U.S.C. 181 et seq.] (except as provided in section 406 of that Act [7 U.S.C. 226, 227]), by the Secretary of Agriculture with respect to any activities subject to that Act; and

(6) subtitle E of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5561 et seq.], by the Bureau, with respect to any person subject to this subchapter. The terms used in paragraph (1) that are not defined in this subchapter or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

(c) Agency powers
For the purpose of the exercise by any agency referred to in subsection (b) of this section of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this subchapter shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b) of this section, each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this subchapter any other authority conferred on it by law, except as provided in subsection (d) of this section.

(d) Rules and regulations
Except as provided in section 1029(a) of the Consumer Financial Protection Act of 2010 [12 U.S.C. 5519(a)], the Bureau may prescribe rules with respect to the collection of debts by debt collectors, as defined in this subchapter.

15 USC 1692m

§ 815.  Reports to Congress by the Bureau; views of other Federal agencies

(a) Not later than one year after the effective date of this subchapter and at one-year intervals thereafter, the Bureau shall make reports to the Congress concerning the administration of its functions under this subchapter, including such recommendations as the Bureau deems necessary or appropriate. In addition, each report of the Bureau shall include its assessment of the extent to which compliance with this subchapter is being achieved and a summary of the enforcement actions taken by the Bureau under section 1692l of this title.

(b) In the exercise of its functions under this subchapter, the Bureau may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 1692l of this title.

15 USC 1692n

§ 816.  Relation to State laws

This subchapter does not annul, alter, or affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this subchapter if the protection such law affords any consumer is greater than the protection provided by this subchapter.

15 USC 1692o

§ 817.  Exemption for State regulation

The Bureau shall by regulation exempt from the requirements of this subchapter any class of debt collection practices within any State if the Bureau determines that under the law of that State that class of debt collection practices is subject to requirements substantially similar to those imposed by this subchapter, and that there is adequate provision for enforcement.

§ 818. Exception for certain bad check enforcement programs operated by private entities

(a) In general
(1) Treatment of certain private entities 
Subject to paragraph (2), a private entity shall be excluded from the definition of a debt collector, pursuant to the exception provided in section 1692a(6) of this title, with respect to the operation by the entity of a program described in paragraph (2)(A) under a contract described in paragraph (2)(B).

(2) Conditions of applicability
Paragraph (1) shall apply if--

(A) a State or district attorney establishes, within the jurisdiction of such State or district attorney and with respect to alleged bad check violations that do not involve a check described in subsection (b), a pretrial diversion program for alleged bad check offenders who agree to participate voluntarily in such program to avoid criminal prosecution;

(B) a private entity, that is subject to an administrative support services contract with a State or district attorney and operates under the direction, supervision, and control of such State or district attorney, operates the pretrial diversion program described in subparagraph (A); and

(C) in the course of performing duties delegated to it by a State or district attorney under the contract, the private entity referred to in subparagraph (B)--

(i) complies with the penal laws of the State;

(ii) conforms with the terms of the contract and directives of the State or district attorney;

(iii) does not exercise independent prosecutorial discretion;

(iv) contacts any alleged offender referred to in subparagraph (A) for purposes of participating in a program referred to in such paragraph--

(I) only as a result of any determination by the State or district attorney that probable cause of a bad check violation under State penal law exists, and that contact with the alleged offender for purposes of participation in the program is appropriate; and

(II) the alleged offender has failed to pay the bad check after demand for payment, pursuant to State law, is made for payment of the check amount;

(v) includes as part of an initial written communication with an alleged offender a clear and conspicuous statement that--

(I) the alleged offender may dispute the validity of any alleged bad check violation;

(II) where the alleged offender knows, or has reasonable cause to believe, that the alleged bad check violation is the result of theft or forgery of the check, identity theft, or other fraud that is not the result of the conduct of the alleged offender, the alleged offender may file a crime report with the appropriate law enforcement agency; and

(III) if the alleged offender notifies the private entity or the district attorney in writing, not later than 30 days after being contacted for the first time pursuant to clause (iv), that there is a dispute pursuant to this subsection, before further restitution efforts are pursued, the district attorney or an employee of the district attorney authorized to make such a determination makes a determination that there is probable cause to believe that a crime has been committed; and

(vi) charges only fees in connection with services under the contract that have been authorized by the contract with the State or district attorney.

(b) Certain checks excluded
A check is described in this subsection if the check involves, or is subsequently found to involve--

(1) a postdated check presented in connection with a payday loan, or other similar transaction, where the payee of the check knew that the issuer had insufficient funds at the time the check was made, drawn, or delivered;

(2) a stop payment order where the issuer acted in good faith and with reasonable cause in stopping payment on the check;

(3) a check dishonored because of an adjustment to the issuer’s account by the financial institution holding such account without providing notice to the person at the time the check was made, drawn, or delivered;

(4) a check for partial payment of a debt where the payee had previously accepted partial payment for such debt;

(5) a check issued by a person who was not competent, or was not of legal age, to enter into a legal contractual obligation at the time the check was made, drawn, or delivered; or

(6) a check issued to pay an obligation arising from a transaction that was illegal in the jurisdiction of the State or district attorney at the time the check was made, drawn, or delivered.

(c) Definitions
For purposes of this section, the following definitions shall apply:

(1) State or district attorney
The term “State or district attorney” means the chief elected or appointed prosecuting attorney in a district, county (as defined in section 2 of title 1), municipality, or comparable jurisdiction, including State attorneys general who act as chief elected or appointed prosecuting  attorneys in a district, county (as so defined), municipality or comparable jurisdiction, who may be referred to by a variety of titles such as district attorneys, prosecuting attorneys, commonwealth’s attorneys, solicitors, county attorneys, and state’s attorneys, and who are responsible for the prosecution of State crimes and violations of jurisdiction-specific local ordinances.

(2) Check
The term “check” has the same meaning as in section 5002(6) of title 12.

(3) Bad check violation
The term “bad check violation” means a violation of the applicable State criminal law relating to the writing of dishonored checks.

15 USC 1692 note

§ 819.  Effective date 

This title takes effect upon the expiration of six months after the date of its enactment, but section 809 shall apply only with respect to debts for which the initial attempt to collect occurs after such effective date.

ENDNOTES

1. Section 604(3) has been renumbered as Section 604(a)(3).

Legislative History

House Report: No. 95-131 (Comm. on Banking, Finance, and Urban Affairs).

Senate Report: No. 95-382 (Comm. on Banking, Housing, and Urban Affairs).

Congressional Record, Vol. 123 (1977)
April 4, House considered and passed H.R. 5294.
Aug. 5, Senate considered and passed amended version of H.R. 5294.
Sept. 8, House considered and passed Senate version.

Enactment: Public Law 95-109 (September 20, 1977)
Amendments: Public Law Nos.
99-361 (July 9, 1986)
101-73 (August 9, 1989)
102-242 (December 19, 1991)
102-550 (October 28, 1992)
104-88 (December 29, 1995)
104-208 (September 30, 1996)
109-351 (October 13, 2006)
111-203 (July 21, 2010)

THE FAIR DEBT COLLECTION PRACTICES ACT

As amended by Public Law 104-208, 110 Stat. 3009 (Sept. 30, 1996)

To amend the Consumer Credit Protection Act to prohibit abusive practices by debt collectors.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Consumer Credit Protection Act (15 U.S.C. 1601 et seq.) is amended by adding at the end thereof the following new title:

TITLE VIII - DEBT COLLECTION PRACTICES  <small>[Fair Debt Collection Practices Act]</small>

Sec.
801.  Short Title
802.  Congressional findings and declaration of purpose
803.  Definitions
804.  Acquisition of location information
805.  Communication in connection with debt collection
806.  Harassment or abuse
807.  False or misleading representations
808.  Unfair practice
809.  Validation of debts
810.  Multiple debts
811.  Legal actions by debt collectors
812.  Furnishing certain deceptive forms
813.  Civil liability
814.  Administrative enforcement
815.  Reports to Congress by the Commission
816.  Relation to State laws
817.  Exemption for State regulation
818.  Effective date

801.  Short Title  [15 USC 1601 note]

This title may be cited as the "Fair Debt Collection Practices Act."

802.  Congressional findings and declarations of purpose  [15 USC 1692]

(a) There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.

(b) Existing laws and procedures for redressing these injuries are inadequate to protect consumers.

(c) Means other than misrepresentation or other abusive debt collection practices are available for the effective collection of debts.

(d) Abusive debt collection practices are carried on to a substantial extent in interstate commerce and through means and instrumentalities of such commerce. Even where abusive debt collection practices are purely intrastate in character, they nevertheless directly affect interstate commerce.

(e) It is the purpose of this title to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.

803.  Definitions [15 USC 1692a]

As used in this title --

(1) The term "Commission" means the Federal Trade Commission.

(2) The term "communication" means the conveying of information regarding a debt directly or indirectly to any person through any medium.

(3) The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.

(4) The term "creditor" means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

(5) The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

(6) The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include --

(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;

(B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;

(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;

(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;

(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and

(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor.

(7) The term "location information" means a consumer's place of abode and his telephone number at such place, or his place of employment.

(8) The term "State" means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing.

<small>§</small> 804.  Acquisition of location information  <small>[15 USC 1692b]</small>

Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall --

(1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer;

(2) not state that such consumer owes any debt;

(3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information;

(4) not communicate by post card;

(5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and

(6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to the communication from the debt collector.

<small>§</small> 805.  Communication in connection with debt collection<small>   [15 USC 1692c]</small>

(a) COMMUNICATION WITH THE CONSUMER GENERALLY.  Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt --

(1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o'clock antimeridian and before 9 o'clock postmeridian, local time at the consumer's location;

(2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney's name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or

(3) at the consumer's place of employment if the debt collector knows or has reason to know that the consumer's employer prohibits the consumer from receiving such communication.

(b) COMMUNICATION WITH THIRD PARTIES.  Except as provided in section 804, without the prior consent of the consumer given directly to the debt collector, or the express permission of a court of competent jurisdiction, or as reasonably necessary to effectuate a postjudgment judicial remedy, a debt collector may not communicate, in connection with the collection of any debt, with any person other than a consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector.

(c) CEASING COMMUNICATION.  If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except --

(1) to advise the consumer that the debt collector's further efforts are being terminated;

(2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or

(3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy.

If such notice from the consumer is made by mail, notification shall be complete upon receipt.

(d) For the purpose of this section, the term "consumer" includes the consumer's spouse, parent (if the consumer is a minor), guardian, executor, or administrator.

806.  Harassment or abuse [15 USC 1692d]

A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person.

(2) The use of obscene or profane language or language the natural consequence of which is to abuse the hearer or reader.

(3) The publication of a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency or to persons meeting the requirements of section 603(f) or 604(3)1 of this Act.

(4) The advertisement for sale of any debt to coerce payment of the debt.

(5) Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.

(6) Except as provided in section 804, the placement of telephone calls without meaningful disclosure of the caller's identity.

807.  False or misleading representations  [15 USC 1962e]

A debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The false representation or implication that the debt collector is vouched for, bonded by, or affiliated with the United States or any State, including the use of any badge, uniform, or facsimile thereof.

(2) The false representation of --

(A) the character, amount, or legal status of any debt; or

(B) any services rendered or compensation which may be lawfully received by any debt collector for the collection of a debt.

(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.

(4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

(6) The false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to --

(A) lose any claim or defense to payment of the debt; or

(B) become subject to any practice prohibited by this title.

(7) The false representation or implication that the consumer committed any crime or other conduct in order to disgrace the consumer.

(8) Communicating or threatening to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.

(9) The use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval.

(10) The use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.

(11) The failure to disclose in the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication, that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose, and the failure to disclose in subsequent communications that the communication is from a debt collector, except that this paragraph shall not apply to a formal pleading made in connection with a legal action.

(12) The false representation or implication that accounts have been turned over to innocent purchasers for value.

(13) The false representation or implication that documents are legal process.

(14) The use of any business, company, or organization name other than the true name of the debt collector's business, company, or organization.

(15) The false representation or implication that documents are not legal process forms or do not require action by the consumer.

(16) The false representation or implication that a debt collector operates or is employed by a consumer reporting agency as defined by section 603(f) of this Act.

808.  Unfair practices [15 USC 1692f]

A debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section:

(1) The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

(2) The acceptance by a debt collector from any person of a check or other payment instrument postdated by more than five days unless such person is notified in writing of the debt collector's intent to deposit such check or instrument not more than ten nor less than three business days prior to such deposit.

(3) The solicitation by a debt collector of any postdated check or other postdated payment instrument for the purpose of threatening or instituting criminal prosecution.

(4) Depositing or threatening to deposit any postdated check or other postdated payment instrument prior to the date on such check or instrument.

(5) Causing charges to be made to any person for communications by concealment of the true propose of the communication. Such charges include, but are not limited to, collect telephone calls and telegram fees.

(6) Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if --

(A) there is no present right to possession of the property claimed as collateral through an enforceable security interest;

(B) there is no present intention to take possession of the property; or

(C) the property is exempt by law from such dispossession or disablement.

(7) Communicating with a consumer regarding a debt by post card.

(8) Using any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.

809.  Validation of debts<small>   [15 USC 1692g]

(a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing --

(1) the amount of the debt;

(2) the name of the creditor to whom the debt is owed;

(3) a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer's written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

(b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector.

(c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.

<small>§</small> 810.  Multiple debts  <small>[15 USC 1692h]</small>

If any consumer owes multiple debts and makes any single payment to any debt collector with respect to such debts, such debt collector may not apply such payment to any debt which is disputed by the consumer and, where applicable, shall apply such payment in accordance with the consumer's directions.

<small>§</small> 811.  Legal actions by debt collectors   <small>[15 USC 1692i]</small>

(a) Any debt collector who brings any legal action on a debt against any consumer shall --

(1) in the case of an action to enforce an interest in real property securing the consumer's obligation, bring such action only in a judicial district or similar legal entity in which such real property is located; or

(2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity --

(A) in which such consumer signed the contract sued upon; or

(B) in which such consumer resides at the commencement of the action.

(b) Nothing in this title shall be construed to authorize the bringing of legal actions by debt collectors.

<small>§</small> 812.  Furnishing certain deceptive forms  <small>[15 USC 1692j]</small>

(a) It is unlawful to design, compile, and furnish any form knowing that such form would be used to create the false belief in a consumer that a person other than the creditor of such consumer is participating in the collection of or in an attempt to collect a debt such consumer allegedly owes such creditor, when in fact such person is not so participating.

(b) Any person who violates this section shall be liable to the same extent and in the same manner as a debt collector is liable under section 813 for failure to comply with a provision of this title.

<small>§</small> 813.  Civil liability  <small>[15 USC 1692k]</small>

(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title with respect to any person is liable to such person in an amount equal to the sum of --

(1) any actual damage sustained by such person as a result of such failure;

(2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney's fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.

(b) In determining the amount of liability in any action under subsection (a), the court shall consider, among other relevant factors --

(1) in any individual action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or

(2) in any class action under subsection (a)(2)(B), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector's noncompliance was intentional.

(c) A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.

(d) An action to enforce any liability created by this title may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within one year from the date on which the violation occurs.

(e) No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the Commission, notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.

<small>§</small> 814.  Administrative enforcement   <small>[15 USC 1692l]</small>

(a) Compliance with this title shall be enforced by the Commission, except to the extend that enforcement of the requirements imposed under this title is specifically committed to another agency under subsection (b). For purpose of the exercise by the Commission of its functions and powers under the Federal Trade Commission Act, a violation of this title shall be deemed an unfair or deceptive act or practice in violation of that Act. All of the functions and powers of the Commission under the Federal Trade Commission Act are available to the Commission to enforce compliance by any person with this title, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests in the Federal Trade Commission Act, including the power to enforce the provisions of this title in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.

(b) Compliance with any requirements imposed under this title shall be enforced under --

(1) section 8 of the Federal Deposit Insurance Act, in the case of --

(A) national banks, by the Comptroller of the Currency;

(B) member banks of the Federal Reserve System (other than national banks), by the Federal Reserve Board; and

(C) banks the deposits or accounts of which are insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System), by the Board of Directors of the Federal Deposit Insurance Corporation;

(2) section 5(d) of the Home Owners Loan Act of 1933, section 407 of the National Housing Act, and sections 6(i) and 17 of the Federal Home Loan Bank Act, by the Federal Home Loan Bank Board (acting directing or through the Federal Savings and Loan Insurance Corporation), in the case of any institution subject to any of those provisions;

(3) the Federal Credit Union Act, by the Administrator of the National Credit Union Administration with respect to any Federal credit union;

(4) subtitle IV of Title 49, by the Interstate Commerce Commission with respect to any common carrier subject to such subtitle;

(5) the Federal Aviation Act of 1958, by the Secretary of Transportation with respect to any air carrier or any foreign air carrier subject to that Act; and

(6) the Packers and Stockyards Act, 1921 (except as provided in section 406 of that Act), by the Secretary of Agriculture with respect to any activities subject to that Act.

(c) For the purpose of the exercise by any agency referred to in subsection (b) of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this title shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b), each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this title any other authority conferred on it by law, except as provided in subsection (d).

(d) Neither the Commission nor any other agency referred to in subsection (b) may promulgate trade regulation rules or other regulations with respect to the collection of debts by debt collectors as defined in this title.

<small>§</small> 815.  Reports to Congress by the Commission  <small>[15 USC 1692m]</small>

(a) Not later than one year after the effective date of this title and at one-year intervals thereafter, the Commission shall make reports to the Congress concerning the administration of its functions under this title, including such recommendations as the Commission deems necessary or appropriate. In addition, each report of the Commission shall include its assessment of the extent to which compliance with this title is being achieved and a summary of the enforcement actions taken by the Commission under section 814 of this title.

(b) In the exercise of its functions under this title, the Commission may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 814 of this title.

<small>§</small> 816.  Relation to State laws  <small>[15 USC 1692n]</small>

This title does not annul, alter, or affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title if the protection such law affords any consumer is greater than the protection provided by this title.

<small>§</small> 817.  Exemption for State regulation   <small>[15 USC 1692o]</small>

The Commission shall by regulation exempt from the requirements of this title any class of debt collection practices within any State if the Commission determines that under the law of that State that class of debt collection practices is subject to requirements substantially similar to those imposed by this title, and that there is adequate provision for enforcement.

<small>§</small> 818.  Effective date  <small>[15 USC 1692 note]</small>

This title takes effect upon the expiration of six months after the date of its enactment, but section 809 shall apply only with respect to debts for which the initial attempt to collect occurs after such effective date.

Approved September 20, 1977

ENDNOTES

1. So in original; however, should read "604(a)(3)."

LEGISLATIVE HISTORY:

Public Law 95-109 [H.R. 5294]

HOUSE REPORT No. 95-131 (Comm. on Banking, Finance, and Urban Affairs).

SENATE REPORT No. 95-382 (Comm. on Banking, Housing, and Urban Affairs).

CONGRESSIONAL RECORD, Vol. 123 (1977):

Apr. 4, considered and passed House.

Aug. 5, considered and passed Senate, amended.

Sept. 8, House agreed to Senate amendment.

WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 13, No. 39:

Sept. 20, Presidential statement.

AMENDMENTS:

SECTION 621, SUBSECTIONS (b)(3), (b)(4) and (b)(5) were amended to transfer certain administrative enforcement responsibilities, pursuant to Pub. L. 95-473, <small>§</small> 3(b), Oct. 17, 1978. 92 Stat. 166; Pub. L. 95-630, Title V. <small>§</small> 501, November 10, 1978, 92 Stat. 3680; Pub. L. 98-443, <small>§</small> 9(h), Oct. 4, 1984, 98 Stat. 708.

SECTION 803, SUBSECTION (6), defining "debt collector," was amended to repeal the attorney at law exemption at former Section (6)(F) and to redesignate Section 803(6)(G) pursuant to Pub. L. 99-361, July 9, 1986, 100 Stat. 768. For legislative history, see H.R. 237, HOUSE REPORT No. 99-405 (Comm. on Banking, Finance and Urban Affairs). CONGRESSIONAL RECORD: Vol. 131 (1985): Dec. 2, considered and passed House. Vol. 132 (1986): June 26, considered and passed Senate.

SECTION 807, SUBSECTION (11), was amended to affect when debt collectors must state (a) that they are attempting to collect a debt and (b) that information obtained will be used for that purpose, pursuant to Pub. L. 104-208 § 2305, 110 Stat. 3009 (Sept. 30, 1996).

Fair Credit Reporting Act

15 U.S.C § 1681

Revised May 2016

As a public service, the staff of the Federal Trade Commission (FTC) has prepared the following complete text of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. Although staff generally followed the format of the U.S. Code as published by the Government Printing Office, the format of this text does differ in minor ways from the Code (and from West’s U.S. Code Annotated). For example, this version uses FCRA section numbers (§§ 601-629) in the headings. (The relevant U.S. Code citation is included with each section heading and each reference to the FCRA in the text.) Although the staff has made every effort to transcribe the statutory material ac- curately, this compendium is intended only as a convenience for the public and not a substitute for the text in the U.S. Code.

This version of the FCRA includes the amendments to the FCRA set forth in the Consumer Credit Reporting Reform Act of 1996 (Public Law 104-208,
the Omnibus Consolidated Appropriations Act for Fiscal Year 1997, Title II, Subtitle D, Chapter 1), Section 311 of the Intelligence Authorization for Fis- cal Year 1998 (Public Law 105-107), the Consumer Reporting Employment Clarification Act of 1998 (Public Law 105-347), Section 506 of the Gramm- Leach-Bliley Act (Public Law 106-102), Sections 358(g) and 505(c) of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) (Public Law 107-56), the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) (Public Law 108-159), Section 719 of the Financial Services Regulatory Relief Act of 2006 (Public Law 109-351), Section 743 (Div. D, Title VII) of the Consolidated Appropriations Act of 2008 (Public Law 110-161), the Credit and Debit Card Receipt Clarification Act of 2007 (Public Law 110-241), and Sections 205 and 302 of the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 (Public Law 111-24), the Consumer Financial Protection Act of 2010 (CFPA) (Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203), and the Red Flag Program Clarification Act of 2010 (Public Law 111-203). The Commission website posted this document on September 1, 2011.

The provisions added to the FCRA by the FACT Act became effective at differ- ent times. In some cases, the provision includes its own effective date. In other cases, the FACT Act provides that the effective dates be prescribed by the FTC and Federal Reserve Board. See 16 CFR Part 602 (69 Fed. Reg. 6526; Febru- ary 11, 2004) (69 Fed. Reg. 29061; May 20, 2004).

The provisions added to the FCRA by the CFPA became effective on July 21, 2011, the “designated transfer date” on which the Bureau of Consumer Finan- cial Protection assumed certain duties specified by the CFPA. See 75 Fed. Reg. 57252 (Sept. 20, 2010).

Contents

§ 601. § 602. § 603. § 604. § 605.

§ 605A.

§ 605B. § 606. § 607. § 608. § 609. § 610. § 611. § 612. § 613. § 614. § 615. § 616. § 617. § 618. § 619. § 620. § 621. § 622. § 623.

§ 624. § 625. § 626. § 627.

§ 628. § 629.

Short title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Congressional findings and statement of purpose [15 U.S.C. § 1681]. . . . . .1 Definitions; rules of construction [15 U.S.C. § 1681a] . . . . . . . . . . . . . . .1 Permissible purposes of consumer reports [15 U.S.C. § 1681b] . . . . . . . . 10 Requirements relating to information contained in consumer reports

[15 U.S.C. § 1681c] . . . . . . . . . . . . . . . . . . . . . . . . . ........... 22 Identity theft prevention; fraud alerts and active duty alerts
[15 U.S.C. § 1681c-1] . . . . . . . . . . . . . . . . . . . . . . . ........... 26 Block of information resulting from identity theft [15 U.S.C. § 1681c-2] . . 30 Disclosure of investigative consumer reports [15 U.S.C. § 1681d] . . . . . . 32 Compliance procedures [15 U.S.C. § 1681e] . . . . . . . . . . . . . . . . . . . . 34 Disclosures to governmental agencies [15 U.S.C. § 1681f] . . . . . . . . . . . 36 Disclosures to consumers [15 U.S.C. § 1681g]. . . . . . . . . . . . . . . . . . . 36 Conditions and form of disclosure to consumers [15 U.S.C. § 1681h] . . . . 48 Procedure in case of disputed accuracy [15 U.S.C. § 1681i] . . . . . . . . . . 50 Charges for certain disclosures [15 U.S.C. § 1681j] . . . . . . . . . . . . . . . 57 Public record information for employment purposes [15 U.S.C. § 1681k]. . 60 Restrictions on investigative consumer reports [15 U.S.C. § 1681l]. . . . . . 61 Requirements on users of consumer reports [15 U.S.C. § 1681m] . . . . . . 61 Civil liability for willful noncompliance [15 U.S.C. § 1681n] . . . . . . . . . 70 Civil liability for negligent noncompliance [15 U.S.C. § 1681o]. . . . . . . . 71 Jurisdiction of courts; limitation of actions [15 U.S.C. § 1681p]. . . . . . . . 71 Obtaining information under false pretenses [15 U.S.C. § 1681q] . . . . . . . 71 Unauthorized disclosures by officers or employees [15 U.S.C. § 1681r]. . . 71 Administrative enforcement [15 U.S.C. § 1681s] . . . . . . . . . . . . . . . . . 72 Information on overdue child support obligations [15 U.S.C. § 1681s-1] . . 78 Responsibilities of furnishers of information to consumer reporting

agencies [15 U.S.C. § 1681s-2]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Affiliate sharing [15 U.S.C. § 1681s-3]. . . . . . . . . . . . . . . . . . . . . . . . 87 Relation to State laws [15 U.S.C. § 1681t]. . . . . . . . . . . . . . . . . . . . . . 90 Disclosures to FBI for counterintelligence purposes [15 U.S.C. § 1681u] . . 93 Disclosures to governmental agencies for counterterrorism purposes

[15 U.S.C. § 1681v]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 97 Disposal of records [15 U.S.C. § 1681w] . . . . . . . . . . . . . . . . . ..... 98

Corporate and technological circumvention prohibited
[15 U.S.C. § 1681x]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 99

§ 601. Short title

This title may be cited as the “Fair Credit Reporting Act”.

§ 602. Congressional findings and statement of purpose [15 U.S.C. § 1681]

1.    (a)  Accuracy and fairness of credit reporting. The Congress makes the fol- lowing findings:

1.    (1)  The banking system is dependent upon fair and accurate credit report- ing. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.

2.    (2)  An elaborate mechanism has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers.

3.    (3)  Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.

4.    (4)  There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.

2.    (b)  Reasonable procedures. It is the purpose of this title to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title.

§ 603. Definitions; rules of construction [15 U.S.C. § 1681a]

1.    (a)  Definitions and rules of construction set forth in this section are applicable for the purposes of this title.

2.    (b)  The term “person” means any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.

3.    (c)  The term “consumer” means an individual.

4.    (d)  Consumer Report

(1) In general. The term “consumer report” means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing,  § 603 - 15 U.S.C. § 1681a    603 - 15 U.S.C. § 1681a

credit capacity, character, general reputation, personal character- istics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for

1.    (A)  credit or insurance to be used primarily for personal, family, or household purposes;

2.    (B)  employment purposes; or

3.    (C)  any other purpose authorized under section 604 [§ 1681b].

(2) Exclusions. Except as provided in paragraph (3), the term “consum- er report” does not include

1.    (A)  subject to section 624, any

1.    (i)  report containing information solely as to transactions or experiences between the consumer and the person making the report;

2.    (ii)  communication of that information among persons related by common ownership or affiliated by corporate control; or

3.    (iii)  communication of other information among persons related by common ownership or affiliated by corporate control, if it is clearly and conspicuously disclosed to
the consumer that the information may be communicated among such persons and the consumer is given the op- portunity, before the time that the information is initially communicated, to direct that such information not be com- municated among such persons;

2.    (B)  any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device;

3.    (C)  any report in which a person who has been requested by a third party to make a specific extension of credit directly or indi- rectly to a consumer conveys his or her decision with respect
to such request, if the third party advises the consumer of the name and address of the person to whom the request was made, and such person makes the disclosures to the consumer required under section 615 [§ 1681m]; or

4.    (D)  a communication described in subsection (o) or (x).

 (3) Restriction on sharing of medical information. Except for information or any communication of information disclosed as provided in section 604(g)(3), the exclusions in paragraph (2) shall not apply with respect to information disclosed to any person related by common ownership or affiliated by corporate control, if the information is–

1.    (A)  medical information;

2.    (B)  an individualized list or description based on the payment trans- actions of the consumer for medical products or services; or

3.    (C)  an aggregate list of identified consumers based on payment transactions for medical products or services.

5.    (e)  The term “investigative consumer report” means a consumer report or portion thereof in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information. However, such information shall not include specific factual information on a consumer’s credit record obtained directly from a creditor of the consumer or from a consumer reporting agency when such information was obtained directly from a creditor of the consumer or from the consumer.

6.    (f)  The term “consumer reporting agency” means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

7.    (g)  The term “file,” when used in connection with information on any consumer, means all of the information on that consumer recorded and re- tained by a consumer reporting agency regardless of how the information is stored.

8.    (h)  The term “employment purposes” when used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.

9.    (i)  The term “medical information” –

(1) means information or data, whether oral or recorded, in any form or medium, created by or derived from a health care provider or the consumer, that relates to –

1.    (A)  the past, present, or future physical, mental, or behavioral health or condition of an individual;

2.    (B)  the provision of health care to an individual; or

3.    (C)  the payment for the provision of health care to an individual.

(2) does not include the age or gender of a consumer, demographic infor- mation about the consumer, including a consumer’s residence address or e-mail address, or any other information about a consumer that does not relate to the physical, mental, or behavioral health or condi- tion of a consumer, including the existence or value of any insurance policy.

10.(j)  Definitions Relating to Child Support Obligations

1.    (1)  The “overdue support” has the meaning given to such term in section 666(e) of title 42 [Social Security Act, 42 U.S.C. § 666(e)].

2.    (2)  The term “State or local child support enforcement agency” means a State or local agency which administers a State or local program for establishing and enforcing child support obligations.

11.(k)  Adverse Action
(1) Actions included. The term “adverse action”

1.    (A)  has the same meaning as in section 701(d)(6) of the Equal Credit Opportunity Act; and

2.    (B)  means

1.    (i)  a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, exist- ing or applied for, in connection with the underwriting of insurance;

2.    (ii)  a denial of employment or any other decision for em- ployment purposes that adversely affects any current or prospective employee;

3.    (iii)  a denial or cancellation of, an increase in any charge for, or any other adverse or unfavorable change in the terms of, any license or benefit described in section 604(a)(3)(D) [§ 1681b]; and

4.    (iv)  an action taken or determination that is

(I) made in connection with an application that was made by, or a transaction that was initiated by, any consumer, or in connection with a review of an account under section 604(a)(3)(F)(ii)[§ 1681b]; and

(II) adverse to the interests of the consumer.

(2) Applicable findings, decisions, commentary, and orders. For pur- poses of any determination of whether an action is an adverse action under paragraph (1)(A), all appropriate final findings, decisions, commentary, and orders issued under section 701(d)(6) of the Equal Credit Opportunity Act by the Bureau or any court shall apply.

(l) The term “firm offer of credit or insurance” means any offer of credit
or insurance to a consumer that will be honored if the consumer is deter- mined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer, except that the offer may be further conditioned on one or more of the following:

1.    (1)  The consumer being determined, based on information in the consumer’s application for the credit or insurance, to meet specific crite- ria bearing on credit worthiness or insurability, as applicable, that are established

1.    (A)  before selection of the consumer for the offer; and

2.    (B)  for the purpose of determining whether to extend credit or insurance pursuant to the offer.

2.    (2)  Verification

1.    (A)  that the consumer continues to meet the specific criteria used
to select the consumer for the offer, by using information in a consumer report on the consumer, information in the consum- er’s application for the credit or insurance, or other information bearing on the credit worthiness or insurability of the consum- er; or

2.    (B)  of the information in the consumer’s application for the credit or insurance, to determine that the consumer meets the specific criteria bearing on credit worthiness or insurability.

3.    (3)  The consumer furnishing any collateral that is a requirement for the extension of the credit or insurance that was

1.    (A)  established before selection of the consumer for the offer of credit or insurance; and

2.    (B)  disclosed to the consumer in the offer of credit or insurance.

13.(m)  The term “credit or insurance transaction that is not initiated by the consumer” does not include the use of a consumer report by a person with which the consumer has an account or insurance policy, for purposes of

1.    (1)  reviewing the account or insurance policy; or

2.    (2)  collecting the account.

14.(n)  The term “State” means any State, the Commonwealth of Puerto Rico, the District of Columbia, and any territory or possession of the United States.

15.(o)  Excluded communications. A communication is described in this subsec- tion if it is a communication

1.    (1)  that, but for subsection (d)(2)(D), would be an investigative consum- er report;

2.    (2)  that is made to a prospective employer for the purpose of

1.    (A)  procuring an employee for the employer; or

2.    (B)  procuring an opportunity for a natural person to work for the employer;

3.    (3)  that is made by a person who regularly performs such procurement;

4.    (4)  that is not used by any person for any purpose other than a purpose described in subparagraph (A) or (B) of paragraph (2); and

5.    (5)  with respect to which

1.    (A)  the consumer who is the subject of the communication

1.    (i)  consents orally or in writing to the nature and scope of the communication, before the collection of any information for the purpose of making the communication;

2.    (ii)  consents orally or in writing to the making of the commu- nication to a prospective employer, before the making of the communication; and

3.    (iii)  in the case of consent under clause (i) or (ii) given orally, is provided written confirmation of that consent by the person making the communication, not later than 3 business days after the receipt of the consent by that person;

2.    (B)  the person who makes the communication does not, for the purpose of making the communication, make any inquiry that
if made by a prospective employer of the consumer who is the subject of the communication would violate any applicable Fed- eral or State equal employment opportunity law or regulation; and

 (C) the person who makes the communication

1.    (i)  discloses in writing to the consumer who is the subject of the communication, not later than 5 business days after receiving any request from the consumer for such disclo- sure, the nature and substance of all information in the consumer’s file at the time of the request, except that the sources of any information that is acquired solely for use in making the communication and is actually used for no other purpose, need not be disclosed other than under ap- propriate discovery procedures in any court of competent jurisdiction in which an action is brought; and

2.    (ii)  notifies the consumer who is the subject of the communi- cation, in writing, of the consumer’s right to request the information described in clause (i).

16.(p)  The term “consumer reporting agency that compiles and maintains files on consumers on a nationwide basis” means a consumer reporting agency that regularly engages in the practice of assembling or evaluating, and maintaining, for the purpose of furnishing consumer reports to third par- ties bearing on a consumer’s credit worthiness, credit standing, or credit capacity, each of the following regarding consumers residing nationwide:

1.    (1)  Public record information.

2.    (2)  Credit account information from persons who furnish that information regularly and in the ordinary course of business.

17.(q)  Definitions relating to fraud alerts.

1.    (1)  The term “active duty military consumer” means a consumer in mili- tary service who–

1.    (A)  is on active duty (as defined in section 101(d)(1) of title 10, United States Code) or is a reservist performing duty under a call or order to active duty under a provision of law referred to in section 101(a)(13) of title 10, United States Code; and

2.    (B)  is assigned to service away from the usual duty station of the consumer.

2.    (2)  The terms “fraud alert” and “active duty alert” mean a statement in the file of a consumer that –

(A) notifies all prospective users of a consumer report relating to the consumer that the consumer may be a victim of fraud, in- cluding identity theft, or is an active duty military consumer, as applicable; and

(B) is presented in a manner that facilitates a clear and conspicu- ous view of the statement described in subparagraph (A) by any person requesting such consumer report.

3.    (3)  The term “identity theft” means a fraud committed using the identify- ing information of another person, subject to such further definition as the Bureau may prescribe, by regulation.

See also 16 CFR Part 603.2 69 Fed. Reg. 63922 (11/03/04)

4.    (4)  The term “identity theft report” has the meaning given that term by rule of the Bureau, and means, at a minimum, a report –

See also 16 CFR Part 603.3 69 Fed. Reg. 63922 (11/03/04)

1.    (A)  that alleges an identity theft;

2.    (B)  that is a copy of an official, valid report filed by a consumer with an appropriate Federal, State, or local law enforcement agency, including the United States Postal Inspection Service, or such other government agency deemed appropriate by the Bureau; and

3.    (C)  the filing of which subjects the person filing the report to criminal penalties relating to the filing of false information if, in fact, the information in the report is false.

5.    (5)  The term “new credit plan” means a new account under an open end credit plan (as defined in section 103(i) of the Truth in Lending Act) or a new credit transaction not under an open end credit plan.

(r) Credit and Debit Related Terms

1.    (1)  The term “card issuer” means –

1.    (A)  a credit card issuer, in the case of a credit card; and

2.    (B)  a debit card issuer, in the case of a debit card.

2.    (2)  The term “credit card” has the same meaning as in section 103 of the Truth in Lending Act.

3.    (3)  The term “debit card” means any card issued by a financial institu- tion to a consumer for use in initiating an electronic fund transfer from the account of the consumer at such financial institution, for the purpose of transferring money between accounts or obtaining money, property, labor, or services.

4.    (4)  The terms “account” and “electronic fund transfer” have the same meanings as in section 903 of the Electronic Fund Transfer Act.

on a nationwide basis relating to-- medical records or payments; residential or tenant history; check writing history; employment history; or insurance claims.

(y) Exclusion of Certain Communications for Employee Investigations (1) A communication is described in this subsection if--

1.    (A)  but for subsection (d)(2)(D), the communication would be a consumer report;

2.    (B)  the communication is made to an employer in connection with an investigation of–

(i) suspected misconduct relating to employment; or

(5) The terms “credit” and “creditor” have the same meanings as in sec- tion 702 of the Equal Credit Opportunity Act.

19.(s)  The term “Federal banking agency” has the same meaning as in section 3 of the Federal Deposit Insurance Act.

20.(t)  The term “financial institution” means a State or National bank, a State
or Federal savings and loan association, a mutual savings bank, a State or Federal credit union, or any other person that, directly or indirectly, holds a transaction account (as defined in section 19(b) of the Federal Reserve Act) belonging to a consumer.

21.(u)  The term “reseller” means a consumer reporting agency that--

1.    (1)  assembles and merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes of furnishing such information to any third party, to the extent of such activities; and

2.    (2)  does not maintain a database of the assembled or merged information from which new consumer reports are produced.

22.(v)  The term “Commission” means the Federal Trade Commission.

23.(w)  The term “Bureau” means the Bureau of Consumer Financial Protection.

24.(x)  The term “nationwide specialty consumer reporting agency” means a consumer reporting agency that compiles and maintains files on consumers

§ 604.

For purposes of this subsection, the term “self-regulatory organiza- tion” includes any self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934), any entity estab- lished under title I of the Sarbanes-Oxley Act of 2002, any board of trade designated by the Commodity Futures Trading Commission, and any futures association registered with such Commission.

Permissible purposes of consumer reports [15 U.S.C. § 1681b]

(ii) compliance with Federal, State, or local laws and regula- tions, the rules of a self-regulatory organization, or any preexisting written policies of the employer;

(C) the communication is not made for the purpose of investigating a consumer’s credit worthiness, credit standing, or credit capac- ity; and

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

1.    (i)  to the employer or an agent of the employer;

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

3.    (iii)  to any self-regulatory organization with regulatory author- ity over the activities of the employer or employee;

4.    (iv)  as otherwise required by law; or

5.    (v)  pursuant to section 608.

(2) Subsequent disclosure. After taking any adverse action based in whole or in part on a communication described in paragraph (1), the employer shall disclose to the consumer a summary containing the nature and substance of the communication upon which the adverse action is based, except that the sources of information acquired solely for use in preparing what would be but for subsection (d)(2)(D) an investigative consumer report need not be disclosed.

(a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

1.    (1)  In response to the order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.

2.    (2)  In accordance with the written instructions of the consumer to whom it relates.

3.     (3)  To a person which it has reason to believe

1.    (A)  intends to use the information in connection with a credit trans- action involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or

2.    (B)  intends to use the information for employment purposes; or

3.    (C)  intends to use the information in connection with the underwrit- ing of insurance involving the consumer; or

4.    (D)  intends to use the information in connection with a determina- tion of the consumer’s eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant’s financial responsibility or status; or

5.    (E)  intends to use the information, as a potential investor or ser- vicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or

6.    (F)  otherwise has a legitimate business need for the information

1.    (i)  in connection with a business transaction that is initiated by the consumer; or

2.    (ii)  to review an account to determine whether the consumer continues to meet the terms of the account.2

7.    (G)  executive departments and agencies in connection with the issu- ance of government-sponsored individually-billed travel charge cards. 2

4.    (4)  In response to a request by the head of a State or local child sup- port enforcement agency (or a State or local government official authorized by the head of such an agency), if the person making the request certifies to the consumer reporting agency that-

1.    (A)  the consumer report is needed for the purpose of establishing an individual’s capacity to make child support payments, determin- ing the appropriate level of such payments, or enforcing a child support order, award, agreement, or judgment;

2.    (B)  the parentage of the consumer for the child to which the obliga- tion relates has been established or acknowledged by the consumer in accordance with State laws under which the obligation arises (if required by those laws); and

(C) the consumer report will be kept confidential, will be used solely for a purpose described in subparagraph (A), and will not be used in connection with any other civil, administrative, or criminal proceeding, or for any other purpose.

(D) Redesignated (C)

5.    (5)  To an agency administering a State plan under Section 454 of the So- cial Security Act (42 U.S.C. § 654) for use to set an initial or modi- fied child support award.

6.    (6)  To the Federal Deposit Insurance Corporation or the National Credit Union Administration as part of its preparation for its appointment or as part of its exercise of powers, as conservator, receiver, or liquidat- ing agent for an insured depository institution or insured credit union under the Federal Deposit Insurance Act or the Federal Credit Union Act, or other applicable Federal or State law, or in connection with the resolution or liquidation of a failed or failing insured depository institution or insured credit union, as applicable.

(b) Conditions for Furnishing and Using Consumer Reports for Employment Purposes.

(1) Certification from user. A consumer reporting agency may furnish a consumer report for employment purposes only if

1.    (A)  the person who obtains such report from the agency certifies to the agency that

1.    (i)  the person has complied with paragraph (2) with respect to the consumer report, and the person will comply with paragraph (3) with respect to the consumer report if para- graph (3) becomes applicable; and

2.    (ii)  information from the consumer report will not be used in violation of any applicable Federal or State equal employ- ment opportunity law or regulation; and

2.    (B)  the consumer reporting agency provides with the report, or has previously provided, a summary of the consumer’s rights under this title, as prescribed by the Bureau under section 609(c)(3) [§ 1681g].

(2) Disclosure to Consumer.

(A) In general. Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless –

1.    (i)  a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and

2.    (ii)  the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

2.    (B)  Application by mail, telephone, computer, or other similar means. If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, at any time before a consumer report is procured or caused to be procured in connection with that application –

1.    (i)  the person who procures the consumer report on the consumer for employment purposes shall provide to the consumer, by oral, written, or electronic means, notice that a consumer report may be obtained for employment purposes, and a summary of the consumer’s rights under section 615(a)(3); and

2.    (ii)  the consumer shall have consented, orally, in writing, or electronically to the procurement of the report by that person.

3.    (C)  Scope. Subparagraph (B) shall apply to a person procuring a consumer report on a consumer in connection with the consum- er’s application for employment only if –

1.    (i)  the consumer is applying for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of title 49, or a posi- tion subject to safety regulation by a State transportation agency; and

2.    (ii)  as of the time at which the person procures the report
or causes the report to be procured the only interaction between the consumer and the person in connection with that employment application has been by mail, telephone, computer, or other similar means.

(3) Conditions on use for adverse actions.

1.    (A)  In general. Except as provided in subparagraph (B), in us-
ing a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates –

1.    (i)  a copy of the report; and

2.    (ii)  a description in writing of the rights of the consumer under this title, as prescribed by the Bureau under section 609(c)(3).3

2.    (B)  Application by mail, telephone, computer, or other similar means.

(i) If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, and if a person who has procured a consumer report on the consumer for employment purposes takes adverse action on the employment application based in whole or in part on the report, then the person must pro- vide to the consumer to whom the report relates, in lieu of the notices required under subparagraph (A) of this section and under section 615(a), within 3 business days of taking such action, an oral, written or electronic notification–

1.    (I)  that adverse action has been taken based in whole or in part on a consumer report received from a consumer reporting agency;

2.    (II)  of the name, address and telephone number of the consumer reporting agency that furnished the consumer report (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis);

3.    (III)  that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide to the consumer the specific reasons why the adverse action was taken; and

4.    (IV)  that the consumer may, upon providing proper identi- fication, request a free copy of a report and may dispute with the consumer reporting agency the accuracy or completeness of any information in a report.

(ii) If, under clause (B)(i)(IV), the consumer requests a copy of a consumer report from the person who procured the report, then, within 3 business days of receiving the consumer’s request, together with proper identification, the person must send or provide to the consumer a copy of a report and a copy of the consumer’s rights as prescribed by the Bureau under section 609(c)(3).3

(C) Scope. Subparagraph (B) shall apply to a person procuring a consumer report on a consumer in connection with the consumer’s application for employment only if –

1.    (i)  the consumer is applying for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of title 49, or a posi- tion subject to safety regulation by a State transportation agency; and

2.    (ii)  as of the time at which the person procures the report
or causes the report to be procured the only interaction between the consumer and the person in connection with that employment application has been by mail, telephone, computer, or other similar means.

(4) Exception for national security investigations.

(A) In general. In the case of an agency or department of the United States Government which seeks to obtain and use a consumer report for employment purposes, paragraph (3) shall not apply to any adverse action by such agency or department which is based in part on such consumer report, if the head of such agency or department makes a written finding that–

1.    (i)  the consumer report is relevant to a national security in- vestigation of such agency or department;

2.    (ii)  the investigation is within the jurisdiction of such agency or department;

3.    (iii)  there is reason to believe that compliance with paragraph (3) will –

(I) endanger the life or physical safety of any person; (II) result in flight from prosecution;

3.     (III)  result in the destruction of, or tampering with, evi- dence relevant to the investigation;

4.    (IV)  result in the intimidation of a potential witness rel- evant to the investigation;

5.    (V)  result in the compromise of classified information; or

6.    (VI)  otherwise seriously jeopardize or unduly delay the investigation or another official proceeding.

2.    (B)  Notification of consumer upon conclusion of investigation. Upon the conclusion of a national security investigation de- scribed in subparagraph (A), or upon the determination that the exception under subparagraph (A) is no longer required for the reasons set forth in such subparagraph, the official exercising the authority in such subparagraph shall provide to the consumer who is the subject of the consumer report with regard to which such finding was made –

1.    (i)  a copy of such consumer report with any classified infor- mation redacted as necessary;

2.    (ii)  notice of any adverse action which is based, in part, on the consumer report; and

3.    (iii)  the identification with reasonable specificity of the nature of the investigation for which the consumer report was sought.

3.    (C)  Delegation by head of agency or department. For purposes of subparagraphs (A)and (B), the head of any agency or department of the United States Government may delegate his or her authorities under this paragraph to an official of such agency or department who has personnel security responsibilities and is a member of the Senior Executive Service or equivalent civilian or military rank.

4.    (D)  Definitions. For purposes of this paragraph, the following defi- nitions shall apply:

1.    (i)  Classified information. The term “classified information” means information that is protected from unauthorized disclosure under Executive Order No. 12958 or successor orders.

2.    (ii)  National security investigation. The term “national secu- rity investigation” means any official inquiry by an agency or department of the United States Government to deter the transaction consists of a firm offer of credit or insurance;

2.    (ii)  the consumer reporting agency has complied with subsection (e);

3.    (iii)  there is not in effect an election by the consumer, made in accordance with subsection (e), to have the consumer’s name and address excluded from lists of names provided by the agency pursuant to this paragraph; and

4.    (iv)  the consumer report does not contain a date of birth that shows that the consumer has not attained the age of 21, or, if the date of birth on the consumer report shows that the consumer has not attained the age of 21, such consumer consents to the consumer reporting agency to such furnishing.

(2) Limits on information received under paragraph (1)(B). A person may receive pursuant to paragraph (1)(B) only

1.    (A)  the name and address of a consumer;

2.    (B)  an identifier that is not unique to the consumer and that is used by the person solely for the purpose of verifying the identity of the consumer; and

3.    (C)  other information pertaining to a consumer that does not identify the relationship or experience of the consumer with respect to a particular creditor or other entity.

(3) Information regarding inquiries. Except as provided in section 609(a)(5) [§ 1681g], a consumer reporting agency shall not furnish to determine the eligibility of a consumer to receive access or continued access to classified information or to determine whether classified information has been lost or compromised.

(c) Furnishing reports in connection with credit or insurance transactions that are not initiated by the consumer.

(1) In general. A consumer reporting agency may furnish a consumer report relating to any consumer pursuant to subparagraph (A) or (C) of subsection (a)(3) in connection with any credit or insurance trans- action that is not initiated by the consumer only if

(A) the consumer authorizes the agency to provide such report to such person; or any person a record of inquiries in connection with a credit or insur- ance transaction that is not initiated by a consumer.

4.    (d)  Reserved.

5.    (e)  Election of consumer to be excluded from lists.

(1) In general. A consumer may elect to have the consumer’s name and address excluded from any list provided by a consumer reporting agency under subsection (c)(1)(B) in connection with a credit or in- surance transaction that is not initiated by the consumer, by notifying the agency in accordance with paragraph (2) that the consumer does not consent to any use of a consumer report relating to the consumer in connection with any credit or insurance transaction that is not initiated by the consumer.

(2) Manner of notification. A consumer shall notify a consumer reporting agency under paragraph (1)

1.    (A)  through the notification system maintained by the agency under paragraph (5); or

2.    (B)  by submitting to the agency a signed notice of election form issued by the agency for purposes of this subparagraph.

(3) Response of agency after notification through system. Upon receipt of notification of the election of a consumer under paragraph (1) through the notification system maintained by the agency under paragraph (5), a consumer reporting agency shall

3.    (A)  inform the consumer that the election is effective only for the 5-year period following the election if the consumer does not submit to the agency a signed notice of election form issued by the agency for purposes of paragraph (2)(B); and

4.    (B)  provide to the consumer a notice of election form, if requested by the consumer, not later than 5 business days after receipt of the notification of the election through the system established under paragraph (5), in the case of a request made at the time the consumer provides notification through the system.

(4) Effectiveness of election. An election of a consumer under paragraph (1)

5.    (A)  shall be effective with respect to a consumer reporting agency beginning 5 business days after the date on which the consumer notifies the agency in accordance with paragraph (2);

6.    (B)  shall be effective with respect to a consumer reporting agency

 (i) subject to subparagraph (C), during the 5-year period beginning 5 business days after the date on which the consumer notifies the agency of the election, in the case of an election for which a consumer notifies the agency only in accordance with paragraph (2)(A); or

(ii) until the consumer notifies the agency under subparagraph (C), in the case of an election for which a consumer notifies the agency in accordance with paragraph (2)(B);

(C) shall not be effective after the date on which the consumer notifies the agency, through the notification system established by the agency under paragraph (5), that the election is no longer effective; and

(D) shall be effective with respect to each affiliate of the agency. (5) Notification System

1.    (A)  In general. Each consumer reporting agency that, under subsection (c)(1)(B), furnishes a consumer report in connection with a credit or insurance transaction that is not initiated by a consumer, shall

1.    (i)  establish and maintain a notification system, including a toll-free telephone number, which permits any consumer whose consumer report is maintained by the agency to notify the agency, with appropriate identification, of the consumer’s election to have the consumer’s name and address excluded from any such list of names and addresses provided by the agency for such a transaction; and

2.    (ii)  publish by not later than 365 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996, and not less than annually thereafter, in a publication of general circulation in the area served by the agency

1.    (I)  a notification that information in consumer files main- tained by the agency may be used in connection with such transactions; and

2.    (II)  the address and toll-free telephone number for consumers to use to notify the agency of the consumer’s election under clause (I).

2.    (B)  Establishment and maintenance as compliance. Establishment and maintenance of a notification system (including a toll-free telephone number) and publication by a consumer reporting agency on the agency’s own behalf and on behalf of any of its affiliates in accordance with this paragraph is deemed to be compliance with this paragraph by each of those affiliates.

(6) Notification system by agencies that operate nationwide. Each consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall establish and maintain a notification system for purposes of paragraph (5) jointly with other such consumer reporting agencies.

6.    (f)  Certain use or obtaining of information prohibited. A person shall not use or obtain a consumer report for any purpose unless

1.    (1)  the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and

2.    (2)  the purpose is certified in accordance with section 607 [§ 1681e] by a prospective user of the report through a general or specific certification.

7.    (g)  Protection of Medical Information

(1) Limitation on consumer reporting agencies. A consumer reporting agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, a consumer report that contains medical information (other than medical contact information treated in the manner required under section 605(a)(6)) about a consumer, unless –

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

2.    (B)  if furnished for employment purposes or in connection with a credit transaction –

1.    (i)  the information to be furnished is relevant to process or effect the employment or credit transaction; and

2.    (ii)  the consumer provides specific written consent for the furnishing of the report that describes in clear and con- spicuous language the use for which the information will be furnished; or

3.    (C)  the information to be furnished pertains solely to transactions, accounts, or balances relating to debts arising from the receipt of medical services, products, or devises, where such infor- mation, other than account status or amounts, is restricted or reported using codes that do not identify, or do not provide in- formation sufficient to infer, the specific provider or the nature of such services, products, or devices, as provided in section 605(a)(6).

2.    (2)  Limitation on creditors. Except as permitted pursuant to paragraph (3)(C) or regulations prescribed under paragraph (5)(A), a creditor shall not obtain or use medical information (other than medical con- tact information treated in the manner required under section 605(a) (6)) pertaining to a consumer in connection with any determination of the consumer’s eligibility, or continued eligibility, for credit.

3.    (3)  Actions authorized by federal law, insurance activities and regulatory determinations. Section 603(d)(3) shall not be construed so as to treat information or any communication of information as a consumer report if the information or communication is disclosed –

1.    (A)  in connection with the business of insurance or annuities, in- cluding the activities described in section 18B of the model Pri- vacy of Consumer Financial and Health Information Regulation issued by the National Association of Insurance Commissioners (as in effect on January 1, 2003);

2.    (B)  for any purpose permitted without authorization under the Standards for Individually Identifiable Health Information promulgated by the Department of Health and Human Services pursuant to the Health Insurance Portability and Accountability Act of 1996, or referred to under section 1179 of such Act, or described in section 502(e) of Public Law 106-102; or

3.    (C)  as otherwise determined to be necessary and appropriate, by regulation or order, by the Bureau or the applicable State insurance authority (with respect to any person engaged in providing insurance or annuities).

4.    (4)  Limitation on redisclosure of medical information. Any person that receives medical information pursuant to paragraph (1) or (3) shall not disclose such information to any other person, except as neces- sary to carry out the purpose for which the information was initially disclosed, or as otherwise permitted by statute, regulation, or order.

5.    (5)  Regulations and Effective Date for Paragraph (2)

(A) Regulations required. The Bureau may, after notice and opportunity for comment, prescribe regulations that permit transac- tions under paragraph (2) that are determined to be necessary as written in section 1088(a)(4)(B) of the CFPA in 2010. The previous version of section 604(b)(5), added in 2003 by the FACT Act, contained two subsections (A) and (B). The latter stated that the rules required to be prescribed by the Federal financial agencies (not including the Commission) be finalized by June 4, 2004,

and appropriate to protect legitimate operational, transactional, risk, consumer, and other needs (and which shall include permit- ting actions necessary for administrative verification purposes), consistent with the intent of paragraph (2) to restrict the use of medical information for inappropriate purposes.

See also 12 CFR Parts 41/222/232/334/571/717 70 Fed. Reg. 70664 (11/22/05)

(6) Coordination with other laws. No provision of this subsection shall be construed as altering, affecting, or superseding the applicability of any other provision of Federal law relating to medical confidentiality.

§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. § 1681c]

(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.    (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.

2.    (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.

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

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

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

6.    (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

5 The reporting periods have been lengthened for certain adverse information pertaining to U.S. Government insured or guaranteed student loans, or pertaining to national direct student loans. See sections 430A(f) and 463(c)(3) of the Higher Education Act of 1965, 20 U.S.C. 1080a(f) and 20 U.S.C. 1087cc(c)(3), respectively 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 pur- pose relating to engaging in the business of insurance other than property and casualty insurance.

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

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

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

3.    (c)  Running of Reporting Period

1.    (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 imme- diately preceded the collection activity, charge to profit and loss, or similar action.

2.    (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.

4.    (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

6 This provision, added in September 1996, should read “paragraphs (4) and (5)....” Prior Section 605(a)(6) was amended and re-designated as Section 605(a)(5) in November 1998. The current Section 605(a)(6), added in December 2003 and now containing no reference to any 7-year period, is obviously inapplicable or filing was withdrawn upon receipt of documentation certifying such withdrawal.

(2) Key factor in credit score information. Any consumer reporting agency that furnishes a consumer report that contains any credit score or any other risk score or predictor on any consumer shall include in the report a clear and conspicuous statement that a key factor (as defined in section 609(f)(2)(B)) that adversely affected such score or predictor was the number of enquiries, if such a predictor was in fact a key factor that adversely affected such score. 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.

5.    (e)  Indication of closure of account by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(4) [§ 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.

6.    (f)  Indication of dispute by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(3) [§ 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.

7.    (g)  Truncation of Credit Card and Debit Card Numbers

1.    (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.    (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.

3.    (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 trans- actions 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 trans- actions that is first put into use on or after January 1, 2005.

(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), 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.

See also 16 CFR Part 641 72 Fed. Reg. 63771-72 (11/09/07) 74 Fed. Reg. 22640-41 (05/14/09)

(2) Regulations

1.    (A)  Regulations required. The Bureau shall, in consultation with the Federal banking agencies, the National Credit Union Administration, and the Federal Trade Commission, 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).

2.    (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--

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

2.    (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.

§ 605A. Identity theft prevention; fraud alerts and active duty alerts [15 U.S.C. § 1681c-1]

1.    (a)  One-call Fraud Alerts

(1) Initial alerts. Upon the direct request of a consumer, or an individual acting on behalf of or as a personal representative of a consumer, who asserts in good faith a suspicion that the consumer has been or is about to become a victim of fraud or related crime, including identity theft, a consumer reporting agency described in section 603(p) that maintains a file on the consumer and has received appropriate proof of the identity of the requester shall –

1.    (A)  include a fraud alert in the file of that consumer, and also provide that alert along with any credit score generated in using that file, for a period of not less than 90 days, beginning on the date of such request, unless the consumer or such representative requests that such fraud alert be removed before the end of such period, and the agency has received appropriate proof of the identity of the requester for such purpose; and

2.    (B)  refer the information regarding the fraud alert under this paragraph to each of the other consumer reporting agencies described in section 603(p), in accordance with procedures developed under section 621(f).

(2) Access to free reports. In any case in which a consumer reporting agency includes a fraud alert in the file of a consumer pursuant to this subsection, the consumer reporting agency shall –

3.    (A)  disclose to the consumer that the consumer may request a free copy of the file of the consumer pursuant to section 612(d); and

4.    (B)  provide to the consumer all disclosures required to be made un- der section 609, without charge to the consumer, not later than 3 business days after any request described in subparagraph (A).

2.    (b)  Extended Alerts

(1) In general. Upon the direct request of a consumer, or an individual acting on behalf of or as a personal representative of a consumer, who submits an identity theft report to a consumer reporting agency described in section 603(p) that maintains a file on the consumer, if the agency has received appropriate proof of the identity of the requester, the agency shall –

1.     (A)  include a fraud alert in the file of that consumer, and also provide that alert along with any credit score generated in using that file, during the 7-year period beginning on the date of such request, unless the consumer or such representative requests that such fraud alert be removed before the end of such period and the agency has received appropriate proof of the identity of the requester for such purpose;

2.    (B)  during the 5-year period beginning on the date of such request, exclude the consumer from any list of consumers prepared by the consumer reporting agency and provided to any third party to offer credit or insurance to the consumer as part of a transaction that was not initiated by the consumer, unless the consumer or such representative requests that such exclusion be rescinded before the end of such period; and

3.    (C)  refer the information regarding the extended fraud alert under this paragraph to each of the other consumer reporting agencies described in section 603(p), in accordance with procedures developed under section 621(f).

(2) Access to free reports. In any case in which a consumer reporting agency includes a fraud alert in the file of a consumer pursuant to this subsection, the consumer reporting agency shall –

1.    (A)  disclose to the consumer that the consumer may request 2 free copies of the file of the consumer pursuant to section 612(d) during the 12-month period beginning on the date on which the fraud alert was included in the file; and

2.    (B)  provide to the consumer all disclosures required to be made under section 609, without charge to the consumer, not later than 3 business days after any request described in subparagraph (A).

(c) Active duty alerts. Upon the direct request of an active duty military consumer, or an individual acting on behalf of or as a personal representative of an active duty military consumer, a consumer reporting agency described in section 603(p) that maintains a file on the active duty military consumer and has received appropriate proof of the identity of the request- er shall –

(1) include an active duty alert in the file of that active duty military consumer, and also provide that alert along with any credit score generated in using that file, during a period of not less than 12 months, or such longer period as the Bureau shall determine, by regulation,

beginning on the date of the request, unless the active duty military consumer or such representative requests that such fraud alert be removed before the end of such period, and the agency has received appropriate proof of the identity of the requester for such purpose;

2.    (2)  during the 2-year period beginning on the date of such request, exclude the active duty military consumer from any list of consumers prepared by the consumer reporting agency and provided to any third party to offer credit or insurance to the consumer as part of a transaction that was not initiated by the consumer, unless the consumer re- quests that such exclusion be rescinded before the end of such period; and

3.    (3)  refer the information regarding the active duty alert to each of the other consumer reporting agencies described in section 603(p), in accordance with procedures developed under section 621(f).

See also 16 CFR Part 613.1 69 Fed. Reg. 63922 (11/03/04)

4.    (d)  Procedures. Each consumer reporting agency described in section 603(p) shall establish policies and procedures to comply with this section, including procedures that inform consumers of the availability of initial, extended, and active duty alerts and procedures that allow consumers and active duty military consumers to request initial, extended, or active duty alerts (as applicable) in a simple and easy manner, including by telephone.

5.    (e)  Referrals of alerts. Each consumer reporting agency described in section 603(p) that receives a referral of a fraud alert or active duty alert from another consumer reporting agency pursuant to this section shall, as though the agency received the request from the consumer directly, follow the procedures required under –

1.    (1)  paragraphs (1)(A) and (2) of subsection (a), in the case of a referral under subsection (a)(1)(B);

2.    (2)  paragraphs (1)(A), (1)(B), and (2) of subsection (b), in the case of a referral under subsection (b)(1)(C); and

3.    (3)  paragraphs (1) and (2) of subsection (c), in the case of a referral under subsection (c)(3).

6.    (f)  Duty of reseller to reconvey alert. A reseller shall include in its report any fraud alert or active duty alert placed in the file of a consumer pursuant to this section by another consumer reporting agency.

7.    (g)  Duty of other consumer reporting agencies to provide contact information. If a consumer contacts any consumer reporting agency that is not described in section 603(p) to communicate a suspicion that the consumer has been or is about to become a victim of fraud or related crime, including identity theft, the agency shall provide information to the consumer on how to contact the Bureau and the consumer reporting agencies described in section 603(p) to obtain more detailed information and request alerts under this section.

(h) Limitations on Use of Information for Credit Extensions (1) Requirements for initial and active duty alerts

1.    (A)  Notification. Each initial fraud alert and active duty alert under this section shall include information that notifies all prospective users of a consumer report on the consumer to which the alert relates that the consumer does not authorize the establish- ment of any new credit plan or extension of credit, other than under an open-end credit plan (as defined in section 103(i)),

in the name of the consumer, or issuance of an additional card on an existing credit account requested by a consumer, or any increase in credit limit on an existing credit account requested by a consumer, except in accordance with subparagraph (B).

2.    (B)  Limitation on Users

1.    (i)  In general. No prospective user of a consumer report that includes an initial fraud alert or an active duty alert in accordance with this section may establish a new credit plan or extension of credit, other than under an open-end credit plan (as defined in section 103(i)), in the name of the consumer, or issue an additional card on an existing credit account requested by a consumer, or grant any increase

in credit limit on an existing credit account requested by a consumer, unless the user utilizes reasonable policies and procedures to form a reasonable belief that the user knows the identity of the person making the request.

2.    (ii)  Verification. If a consumer requesting the alert has specified a telephone number to be used for identity verification purposes, before authorizing any new credit plan or extension described in clause (i) in the name of such consumer, a user of such consumer report shall contact the consumer using that telephone number or take reasonable steps to verify the consumer’s identity and confirm that the application for a new credit plan is not the result of identity theft.

29

§ 605A - 15 U.S.C. § 1681c-1

§ 605B - 15 U.S.C. § 1681c-2

(2) Requirements for Extended Alerts

1.    (A)  Notification. Each extended alert under this section shall include information that provides all prospective users of a consumer report relating to a consumer with –

1.    (i)  notification that the consumer does not authorize the establishment of any new credit plan or extension of credit de- scribed in clause (i), other than under an open-end credit plan (as defined in section 103(i)), in the name of the consumer, or issuance of an additional card on an existing credit account requested by a consumer, or any increase

in credit limit on an existing credit account requested by a consumer, except in accordance with subparagraph (B); and

2.    (ii)  a telephone number or other reasonable contact method designated by the consumer.

2.    (B)  Limitation on users. No prospective user of a consumer report or of a credit score generated using the information in the file of a consumer that includes an extended fraud alert in accordance with this section may establish a new credit plan or extension of credit, other than under an open-end credit plan (as defined in section 103(i)), in the name of the consumer, or issue an additional card on an existing credit account requested by a consumer, or any increase in credit limit on an exist-

ing credit account requested by a consumer, unless the user contacts the consumer in person or using the contact method described in subparagraph (A)(ii) to confirm that the application for a new credit plan or increase in credit limit, or request for an additional card is not the result of identity theft.

§ 605B. Block of information resulting from identity theft [15 U.S.C. § 1681c-2]

(a) Block. Except as otherwise provided in this section, a consumer reporting agency shall block the reporting of any information in the file of a consumer that the consumer identifies as information that resulted from an alleged identity theft, not later than 4 business days after the date of receipt by such agency of –

1.    (1)  appropriate proof of the identity of the consumer;

2.    (2)  a copy of an identity theft report;

3.    (3)  the identification of such information by the consumer; and

30

(4) a statement by the consumer that the information is not information relating to any transaction by the consumer.

2.    (b)  Notification. A consumer reporting agency shall promptly notify the furnisher of information identified by the consumer under subsection (a)--

1.    (1)  that the information may be a result of identity theft;

2.    (2)  that an identity theft report has been filed;

3.    (3)  that a block has been requested under this section; and

4.    (4)  of the effective dates of the block.

3.    (c)  Authority to Decline or Rescind

1.    (1)  In general. A consumer reporting agency may decline to block, or may rescind any block, of information relating to a consumer under this section, if the consumer reporting agency reasonably determines that –

1.    (A)  the information was blocked in error or a block was requested by the consumer in error;

2.    (B)  the information was blocked, or a block was requested by the consumer, on the basis of a material misrepresentation of fact by the consumer relevant to the request to block; or

3.    (C)  the consumer obtained possession of goods, services, or money as a result of the blocked transaction or transactions.

2.    (2)  Notification to consumer. If a block of information is declined or rescinded under this subsection, the affected consumer shall be notified promptly, in the same manner as consumers are notified of the reinsertion of information under section 611(a)(5)(B).

3.    (3)  Significance of block. For purposes of this subsection, if a consumer reporting agency rescinds a block, the presence of information in the file of a consumer prior to the blocking of such information is not evidence of whether the consumer knew or should have known that the consumer obtained possession of any goods, services, or money as a result of the block.

4.    (d)  Exception for Resellers

(1) No reseller file. This section shall not apply to a consumer reporting agency, if the consumer reporting agency –

1.    (A)  is a reseller;

2.    (B)  is not, at the time of the request of the consumer under subsection (a), otherwise furnishing or reselling a consumer report concerning the information identified by the consumer; and

31

§ 605B - 15 U.S.C. § 1681c-2

§ 606 - 15 U.S.C. § 1681d

(C) informs the consumer, by any means, that the consumer may report the identity theft to the Bureau to obtain consumer information regarding identity theft.

(2) Reseller with file. The sole obligation of the consumer reporting agency under this section, with regard to any request of a consumer under this section, shall be to block the consumer report maintained by the consumer reporting agency from any subsequent use, if –

1.    (A)  the consumer, in accordance with the provisions of subsection (a), identifies, to a consumer reporting agency, information in the file of the consumer that resulted from identity theft; and

2.    (B)  the consumer reporting agency is a reseller of the identified information.

(3) Notice. In carrying out its obligation under paragraph (2), the re- seller shall promptly provide a notice to the consumer of the decision to block the file. Such notice shall contain the name, address, and telephone number of each consumer reporting agency from which the consumer information was obtained for resale.

5.    (e)  Exception for verification companies. The provisions of this section do 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, except that, beginning 4 business days after receipt of information described in paragraphs (1) through (3) of subsection (a), a check services company shall not report to a national consumer reporting agency described in section 603(p), any information identified in the subject identity theft report as resulting from identity theft.

6.    (f)  Access to blocked information by law enforcement agencies. No provision of this section shall be construed as requiring a consumer reporting agency to prevent a Federal, State, or local law enforcement agency from accessing blocked information in a consumer file to which the agency could otherwise obtain access under this title.

§ 606. Disclosure of investigative consumer reports [15 U.S.C. § 1681d]

(a) Disclosure of fact of preparation. A person may not procure or cause to be prepared an investigative consumer report on any consumer unless

(1) it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character,

32

general reputation, personal characteristics and mode of living, whichever are applicable, may be made, and such disclosure

1.    (A)  is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and

2.    (B)  includes a statement informing the consumer of his right to request the additional disclosures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 609(c) [§ 1681g]; and

(2) the person certifies or has certified to the consumer reporting agency that

1.    (A)  the person has made the disclosures to the consumer required by paragraph (1); and

2.    (B)  the person will comply with subsection (b).

2.    (b)  Disclosure on request of nature and scope of investigation. Any person who procures or causes to be prepared an investigative consumer report on any consumer shall, upon written request made by the consumer within a reasonable period of time after the receipt by him of the disclosure required by subsection (a)(1) of this section, make a complete and accu- rate disclosure of the nature and scope of the investigation requested. This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later.

3.    (c)  Limitation on liability upon showing of reasonable procedures for compliance with provisions. No person may be held liable for any violation of subsection (a) or (b) of this section if he shows by a preponderance of the evidence that at the time of the violation he maintained reasonable procedures to assure compliance with subsection (a) or (b) of this section.

4.    (d)  Prohibitions

1.    (1)  Certification. A consumer reporting agency shall not prepare or furnish investigative consumer report unless the agency has received a certification under subsection (a)(2) from the person who requested the report.

2.    (2)  Inquiries. A consumer reporting agency shall not make an inquiry for the purpose of preparing an investigative consumer report on a consumer for employment purposes if the making of the inquiry by an employer or prospective employer of the consumer would violate

1.     (A)  the agency has followed reasonable procedures to obtain confirmation of the information, from an additional source that has independent and direct knowledge of the information; or

2.    (B)  the person interviewed is the best possible source of the information.

Compliance procedures [15 U.S.C. § 1681e]

any applicable Federal or State equal employment opportunity law or regulation.

(3) Certain public record information. Except as otherwise provided in section 613 [§ 1681k], a consumer reporting agency shall not furnish an investigative consumer report that includes information that is a matter of public record and that relates to an arrest, indictment, con- viction, civil judicial action, tax lien, or outstanding judgment, unless the agency has verified the accuracy of the information during the 30-day period ending on the date on which the report is furnished.

(4) Certain adverse information. A consumer reporting agency shall not prepare or furnish an investigative consumer report on a consumer that contains information that is adverse to the interest of the consum- er and that is obtained through a personal interview with a neighbor, friend, or associate of the consumer or with another person with whom the consumer is acquainted or who has knowledge of such item of information, unless

1.    (a)  Identity and purposes of credit users. Every consumer reporting agency shall maintain reasonable procedures designed to avoid violations of section 605 [§ 1681c] and to limit the furnishing of consumer reports to the purposes listed under section 604 [§ 1681b] of this title. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify

that the information will be used for no other purpose. Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by such prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report to any person if it has reasonable grounds for believing that the consumer report will not be used for a purpose listed in section 604 [§ 1681b] of this title.

2.    (b)  Accuracy of report. Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

34

(c) Disclosure of consumer reports by users allowed. A consumer reporting agency may not prohibit a user of a consumer report furnished by the agency on a consumer from disclosing the contents of the report to the consumer, if adverse action against the consumer has been taken by the user based in whole or in part on the report.

4.    (d)  Notice to Users and Furnishers of Information

(1) Notice requirement. A consumer reporting agency shall provide to any person

1.    (A)  who regularly and in the ordinary course of business furnishes information to the agency with respect to any consumer; or

2.    (B)  to whom a consumer report is provided by the agency; a notice of such person’s responsibilities under this title.

See also 16 CFR 698, App G-H 69 Fed. Reg. 69776 (11/30/04)

(2) Content of notice. The Bureau shall prescribe the content of notices under paragraph (1), and a consumer reporting agency shall be in compliance with this subsection if it provides a notice under para- graph (1) that is substantially similar to the Bureau prescription under this paragraph.

5.    (e)  Procurement of Consumer Report for Resale

(1) Disclosure. A person may not procure a consumer report for purposes of reselling the report (or any information in the report) unless the person discloses to the consumer reporting agency that originally furnishes the report

1.    (A)  the identity of the end-user of the report (or information); and

2.    (B)  each permissible purpose under section 604 [§ 1681b] for which the report is furnished to the end-user of the report (or information).

(2) Responsibilities of procurers for resale. A person who procures a consumer report for purposes of reselling the report (or any information in the report) shall

(A) establish and comply with reasonable procedures designed to ensure that the report (or information) is resold by the person only for a purpose for which the report may be furnished under section 604 [§ 1681b], including by requiring that each person to which the report (or information) is resold and that resells or provides the report (or information) to any other person

1.     (A)  the end user is an agency or department of the United States Government which procures the report from the person for pur- poses of determining the eligibility of the consumer concerned to receive access or continued access to classified information (as defined in section 604(b)(4)(E)(i)); and

2.    (B)  the agency or department certifies in writing to the person reselling the report that nondisclosure is necessary to protect classified information or the safety of persons employed by or contracting with, or undergoing investigation for work or con- tracting with the agency or department.

Disclosures to governmental agencies [15 U.S.C. § 1681f]

1.    (i)  identifies each end user of the resold report (or information);

2.    (ii)  certifies each purpose for which the report (or information) will be used; and

3.    (iii)  certifies that the report (or information) will be used for no other purpose; and

(B) before reselling the report, make reasonable efforts to verify the identifications and certifications made under subparagraph (A).

(3) Resale of consumer report to a federal agency or department. Notwithstanding paragraph (1) or (2), a person who procures a consumer report for purposes of reselling the report (or any information in the report) shall not disclose the identity of the end-user of the report under paragraph (1) or (2) if –

Notwithstanding the provisions of section 604 [§ 1681b] of this title, a consumer reporting agency may furnish identifying information respecting any consumer, limited to his name, address, former addresses, places of employment, or former places of employment, to a governmental agency.

§ 609. Disclosures to consumers [15 U.S.C. § 1681g]

(a) Information on file; sources; report recipients. Every consumer reporting agency shall, upon request, and subject to 610(a)(1) [§ 1681h], clearly and accurately disclose to the consumer:

(1) All information in the consumer’s file at the time of the request except that--

(A) if the consumer to whom the file relates requests that the first 5 digits of the social security number (or similar identification number) of the consumer not be included in the disclosure and (3) (A).

Identification of each person (including each end-user identified under section 607(e)(1) [§ 1681e]) that procured a consumer report

1.    (i)  for employment purposes, during the 2-year period preceding the date on which the request is made; or

2.    (ii)  for any other purpose, during the 1-year period preceding the date on which the request is made.

2.    (B)  An identification of a person under subparagraph (A) shall include

1.    (i)  the name of the person or, if applicable, the trade name (written in full) under which such person conducts business; and

2.    (ii)  upon request of the consumer, the address and telephone number of the person.

3.    (C)  Subparagraph (A) does not apply if –

1.    (i)  the end user is an agency or department of the United States Government that procures the report from the person for purposes of determining the eligibility of the consumer to whom the report relates to receive access or continued access to classified information (as defined in section 604(b)(4)(E)(i)); and

2.    (ii)  the head of the agency or department makes a written finding as prescribed under section 604(b)(4)(A). § 609 - 15 U.S.C. § 1681g the consumer reporting agency has received appropriate proof of the identity of the requester, the consumer reporting agency shall so truncate such number in such disclosure; and

(B) nothing in this paragraph shall be construed to require a consumer reporting agency to disclose to a consumer any information concerning credit scores or any other risk scores or predic- tors relating to the consumer.

(2) The sources of the information; except that the sources of information acquired solely for use in preparing an investigative consumer report and actually use for no other purpose need not be disclosed: Provided, That in the event an action is brought under this title, such sources shall be available to the plaintiff under appropriate discovery procedures in the court in which the action is brought. § 609 - 15 U.S.C. § 1681g

4.    (4)  The dates, original payees, and amounts of any checks upon which is based any adverse characterization of the consumer, included in the file at the time of the disclosure.

5.    (5)  A record of all inquiries received by the agency during the 1-year period preceding the request that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer.

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

2.    (b)  Exempt information. The requirements of subsection (a) of this section respecting the disclosure of sources of information and the recipients
of consumer reports do not apply to information received or consumer reports furnished prior to the effective date of this title except to the extent that the matter involved is contained in the files of the consumer reporting agency on that date.

3.    (c)  Summary of Rights to Obtain and Dispute Information in Consumer Reports and to Obtain Credit Scores

See also 16 CFR Part 698, App F 69 Fed. Reg. 69776 (11/30/04)

(1) Bureau Summary of Rights Required

1.    (A)  In general. The Bureau shall prepare a model summary of the rights of consumers under this title.

2.    (B)  Content of summary. The summary of rights prepared under subparagraph (A) shall include a description of –

1.    (i)  the right of a consumer to obtain a copy of a consumer report under subsection (a) from each consumer reporting agency;

2.    (ii)  the frequency and circumstances under which a consumer is entitled to receive a consumer report without charge under section 612;

3.    (iii)  the right of a consumer to dispute information in the file of the consumer under section 611;

4.    (iv)  the right of a consumer to obtain a credit score from a consumer reporting agency, and a description of how to obtain a credit score;

5.     (v)  the method by which a consumer can contact, and obtain a consumer report from, a consumer reporting agency with- out charge, as provided in the regulations of the Bureau prescribed under section 211(c) of the Fair and Accurate Credit Transactions Act of 2003; and

6.    (vi)  the method by which a consumer can contact, and obtain
a consumer report from, a consumer reporting agency described in section 603(w), as provided in the regulations of the Bureau prescribed under section 612(a)(1)(C).

(C) Availability of summary of rights. The Bureau shall –

1.    (i)  actively publicize the availability of the summary of rights

prepared under this paragraph;

2.    (ii)  conspicuously post on its Internet website the availability of such summary of rights; and

3.    (iii)  promptly make such summary of rights available to consumers, on request.

(2) Summary of rights required to be included with agency disclosures. A consumer reporting agency shall provide to a consumer, with each written disclosure by the agency to the consumer under this section –

1.    (A)  the summary of rights prepared by the Bureau under paragraph (1);

2.    (B)  in the case of a consumer reporting agency described in section 603(p), a toll-free telephone number established by the agency, at which personnel are accessible to consumers during normal business hours;

3.    (C)  a list of all Federal agencies responsible for enforcing any pro- vision of this title, and the address and any appropriate phone number of each such agency, in a form that will assist the consumer in selecting the appropriate agency;

4.    (D)  a statement that the consumer may have additional rights under State law, and that the consumer may wish to contact a State or local consumer protection agency or a State attorney general (or the equivalent thereof) to learn of those rights; and

5.    (E)  a statement that a consumer reporting agency is not required
to remove accurate derogatory information from the file of a consumer, unless the information is outdated under section 605 or cannot be verified.

4.    (d)  Summary of Rights of Identity Theft Victims

See also 16 CFR Part 698, App E 69 Fed. Reg. 69776 (11/30/04)

(1) In general. The Bureau, in consultation with the Federal banking agencies and the National Credit Union Administration, shall prepare a model summary of the rights of consumers under this title with re- spect to the procedures for remedying the effects of fraud or identity theft involving credit, an electronic fund transfer, or an account or transaction at or with a financial institution or other creditor.

(2) Summary of rights and contact information. Beginning 60 days
after the date on which the model summary of rights is prescribed in final form by the Bureau pursuant to paragraph (1), if any consumer contacts a consumer reporting agency and expresses a belief that the consumer is a victim of fraud or identity theft involving credit, an electronic fund transfer, or an account or transaction at or with a financial institution or other creditor, the consumer reporting agency shall, in addition to any other action that the agency may take, pro- vide the consumer with a summary of rights that contains all of the information required by the Bureau under paragraph (1), and information on how to contact the Bureau to obtain more detailed information.

5.    (e)  Information Available to Victims

(1) In general. For the purpose of documenting fraudulent transactions resulting from identity theft, not later than 30 days after the date of receipt of a request from a victim in accordance with paragraph (3), and subject to verification of the identity of the victim and the claim of identity theft in accordance with paragraph (2), a business entity that has provided credit to, provided for consideration products, goods, or services to, accepted payment from, or otherwise entered into a commercial transaction for consideration with, a person who has allegedly made unauthorized use of the means of identification of the victim, shall provide a copy of application and business transaction records in the control of the business entity, whether maintained by the business entity or by another person on behalf of the business entity, evidencing any transaction alleged to be a result of identity theft to –

1.    (A)  the victim;

2.    (B)  any Federal, State, or local government law enforcement agency or officer specified by the victim in such a request; or

 (C) Any law enforcement agency investigating the identity theft
and authorized by the victim to take receipt of records provided under this subsection.

(2) Verification of identity and claim. Before a business entity provides any information under paragraph (1), unless the business entity, at its discretion, otherwise has a high degree of confidence that it knows the identity of the victim making a request under paragraph (1), the victim shall provide to the business entity –

1.    (A)  as proof of positive identification of the victim, at the election of the business entity

1.    (i)  the presentation of a government-issued identification card;

2.    (ii)  personally identifying information of the same type as was provided to the business entity by the unauthorized per- son; or

3.    (iii)  personally identifying information that the business entity typically requests from new applicants or for new transac- tions, at the time of the victim’s request for information, including any documentation described in clauses (i) and (ii); and

2.    (B)  as proof of a claim of identity theft, at the election of the business entity –

1.    (i)  a copy of a police report evidencing the claim of the victim of identity theft; and

2.    (ii)  a properly completed –

(I) copy of a standardized affidavit of identity theft de- veloped and made available by the Bureau; or

(II) an affidavit of fact that is acceptable to the business entity for that purpose.

(3) Procedures. The request of a victim under paragraph (1) shall –

1.    (A)  be in writing;

2.    (B)  be mailed to an address specified by the business entity, if any; and

3.    (C)  if asked by the business entity, include relevant information about any transaction alleged to be a result of identity theft to facilitate compliance with this section including – (i)  if known by the victim (or if readily obtainable by the victim), the date of the application or transaction; and

1.    (ii)  if known by the victim (or if readily obtainable by the vic- tim), any other identifying information such as an account or transaction number.

4.    (4)  No charge to victim. Information required to be provided under paragraph (1) shall be so provided without charge.

5.    (5)  Authority to decline to provide information. A business entity may decline to provide information under paragraph (1) if, in the exercise of good faith, the business entity determines that –

1.    (A)  this subsection does not require disclosure of the information;

2.    (B)  after reviewing the information provided pursuant to paragraph (2), the business entity does not have a high degree of confi- dence in knowing the true identity of the individual requesting the information;

3.    (C)  the request for the information is based on a misrepresentation of fact by the individual requesting the information relevant to the request for information; or

(D the information requested is Internet navigational data or similar information about a person’s visit to a website or online service.

6.    (6)  Limitation on liability. Except as provided in section 621, sections 616 and 617 do not apply to any violation of this subsection.

7.    (7)  Limitation on civil liability. No business entity may be held civilly liable under any provision of Federal, State, or other law for disclo- sure, made in good faith pursuant to this subsection.

8.    (8)  No new recordkeeping obligation. Nothing in this subsection cre- ates an obligation on the part of a business entity to obtain, retain, or maintain information or records that are not otherwise required to be obtained, retained, or maintained in the ordinary course of its business or under other applicable law.

9.    (9)  Rule of Construction

(A) In general. No provision of subtitle A of title V of Public Law 106-102, prohibiting the disclosure of financial information by a business entity to third parties shall be used to deny disclosure of information to the victim under this subsection.

 (B) Limitation. Except as provided in subparagraph (A), nothing in this subsection permits a business entity to disclose information, including information to law enforcement under subpara- graphs (B) and (C) of paragraph (1), that the business entity is otherwise prohibited from disclosing under any other applicable provision of Federal or State law.

(10) Affirmative defense. In any civil action brought to enforce this subsection, it is an affirmative defense (which the defendant must establish by a preponderance of the evidence) for a business entity to file an affidavit or answer stating that–

1.    (A)  the business entity has made a reasonably diligent search of its available business records; and

2.    (B)  the records requested under this subsection do not exist or are not reasonably available.

(11) Definition of victim. For purposes of this subsection, the term “victim” means a consumer whose means of identification or financial information has been used or transferred (or has been alleged to have been used or transferred) without the authority of that consumer, with the intent to commit, or to aid or abet, an identity theft or a similar crime.

(12) Effective date. This subsection shall become effective 180 days after the date of enactment of this subsection.

(13) Effectiveness study. Not later than 18 months after the date of enactment of this subsection, the Comptroller General of the United States shall submit a report to Congress assessing the effectiveness of this provision.

(f) Disclosure of Credit Scores

(1) In general. Upon the request of a consumer for a credit score, a consumer reporting agency shall supply to the consumer a state- ment indicating that the information and credit scoring model may be different than the credit score that may be used by the lender, and a notice which shall include –

1.    (A)  the current credit score of the consumer or the most recent credit score of the consumer that was previously calculated by the credit reporting agency for a purpose related to the exten- sion of credit;

2.    (B)  the range of possible credit scores under the model used;

(C) all of the key factors that adversely affected the credit score of the consumer in the model used, the total number of which shall not exceed 4, subject to paragraph (9);

4.    (D)  the date on which the credit score was created; and

5.    (E)  the name of the person or entity that provided the credit score or credit file upon which the credit score was created.

(2) Definitions. For purposes of this subsection, the following definitions shall apply:

(A) The term “credit score” –

(i) means a numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of cer- tain credit behaviors, including default (and the numerical value or the categorization derived from such analysis may also be referred to as a “risk predictor” or “risk score”); and

(ii) does not include –

1.    (I)  any mortgage score or rating of an automated un- derwriting system that considers one or more factors in addition to credit information, including the loan to value ratio, the amount of down payment, or the financial assets of a consumer; or

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

(B) The term “key factors” means all relevant elements or reasons adversely affecting the credit score for the particular individual, listed in the order of their importance based on their effect on the credit score.

(3) Timeframe and manner of disclosure. The information required by this subsection shall be provided in the same timeframe and manner as the information described in subsection (a).

(4) Applicability to certain uses. This subsection shall not be construed so as to compel a consumer reporting agency to develop or disclose a score if the agency does not –

(A) distribute scores that are used in connection with residential real property loans; or

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

5.    (5)  Applicability to credit scores developed by another person.

1.    (A)  In general. This subsection shall not be construed to require a consumer reporting agency that distributes credit scores developed by another person or entity to provide a further explanation of them, or to process a dispute arising pursuant to section 611, except that the consumer reporting agency shall provide the consumer with the name and address and website for contacting the person or entity who developed the score or developed the methodology of the score.

2.    (B)  Exception. This paragraph shall not apply to a consumer reporting agency that develops or modifies scores that are developed by another person or entity.

6.    (6)  Maintenance of credit scores not required. This subsection shall not be construed to require a consumer reporting agency to maintain credit scores in its files.

7.    (7)  Compliance in certain cases. In complying with this subsection, a consumer reporting agency shall –

1.    (A)  supply the consumer with a credit score that is derived from a credit scoring model that is widely distributed to users by that consumer reporting agency in connection with residential real property loans or with a credit score that assists the consumer in understanding the credit scoring assessment of the credit behavior of the consumer and predictions about the future credit behavior of the consumer; and

2.    (B)  a statement indicating that the information and credit scoring model may be different than that used by the lender.

8.    (8)  Fair and reasonable fee. A consumer reporting agency may charge a fair and reasonable fee, as determined by the Bureau, for providing the information required under this subsection.

See also 69 Fed. Reg. 64698 (11/08/04)

9.    (9)  Use of enquiries as a key factor. If a key factor that adversely affects the credit score of a consumer consists of the number of enquiries made with respect to a consumer report, that factor shall be included in the disclosure pursuant to paragraph (1)(C) without regard to the numerical limitation in such paragraph.

45

§ 609 - 15 U.S.C. § 1681g

§ 609 - 15 U.S.C. § 1681g

(g) Disclosure of Credit Scores by Certain Mortgage Lenders

(1) In general. Any person who makes or arranges loans and who uses
a consumer credit score, as defined in subsection (f), in connection with an application initiated or sought by a consumer for a closed end loan or the establishment of an open end loan for a consumer purpose that is secured by 1 to 4 units of residential real property (hereafter in this subsection referred to as the “lender”) shall provide the follow- ing to the consumer as soon as reasonably practicable:

1.    (A)  Information Required under Subsection (f)

1.    (i)  In general. A copy of the information identified in subsection (f) that was obtained from a consumer reporting agency or was developed and used by the user of the information.

2.    (ii)  Notice under subparagraph (D). In addition to the information provided to it by a third party that provided the credit score or scores, a lender is only required to provide the notice contained in subparagraph (D).

2.    (B)  Disclosures in Case of Automated Underwriting System

1.    (i)  In general. If a person that is subject to this subsection uses an automated underwriting system to underwrite a loan, that person may satisfy the obligation to provide a credit score by disclosing a credit score and associated key factors supplied by a consumer reporting agency.

2.    (ii)  Numerical credit score. However, if a numerical credit score is generated by an automated underwriting system used by an enterprise, and that score is disclosed to the person, the score shall be disclosed to the consumer consistent with subparagraph (c).

(iii) Enterprise defined. For purposes of this subparagraph, the term “enterprise” has the same meaning as in para- graph (6) of section 1303 of the Federal Housing Enter- prises Financial Safety and Soundness Act of 1992.

3.    (C)  Disclosures of credit scores not obtained from a consumer reporting agency. A person that is subject to the provisions of this subsection and that uses a credit score, other than a credit score provided by a consumer reporting agency, may satisfy the obligation to provide a credit score by disclosing a credit score and associated key factors (D) Notice to home loan applicants. A copy of the following notice, which shall include the name, address, and telephone number of each consumer reporting agency providing a credit score that was used:

“Notice To The Home Loan Applicant

“In connection with your application for a home loan, the lender must disclose to you the score that a consumer reporting agency distributed to users and the lender used in connection with your home loan, and the key factors affecting your credit scores.

“The credit score is a computer generated summary calculated at the time of the request and based on information that a consumer reporting agency or lender has on file. The scores are based on data about your credit history and payment patterns. Credit scores are important because they are used to assist the lender in determining whether you will obtain a loan. They may also be used to determine what interest rate you may be offered on the mortgage. Credit scores can change over time, depending on your conduct, how your credit history and payment patterns change, and how credit scoring technologies change.

“Because the score is based on information in your credit history, it is very important that you review the credit-related information that is being furnished to make sure it is accurate. Credit records may vary from one company to another.

“If you have questions about your credit score or the credit information that
is furnished to you, contact the consumer reporting agency at the address and telephone number provided with this notice, or contact the lender, if the lender developed or generated the credit score. The consumer reporting agency plays no part in the decision to take any action on the loan application and is unable to provide you with specific reasons for the decision on a loan application.

“If you have questions concerning the terms of the loan, contact the lender.”

(E) Actions not required under this subsection. This subsection shall not require any person to –

(i) explain the information provided pursuant to subsection (f);

(ii disclose any information other than a credit score or key factors, as defined in subsection (f);

3.    (iii)  disclose any credit score or related information obtained by the user after a loan has closed;

4.    (iv)  provide more than 1 disclosure per loan transaction; or  (2)

(v) provide the disclosure required by this subsection when another person has made the disclosure to the consumer for that loan transaction.

6.    (F)  No Obligation for Content

1.    (i)  In general. The obligation of any person pursuant to
this subsection shall be limited solely to providing a copy of the information that was received from the consumer reporting agency.

2.    (ii)  Limit on liability. No person has liability under this subsection for the content of that information or for the omission of any information within the report provided by the consumer reporting agency.

7.    (G)  Person defined as excluding enterprise. As used in this sub- section, the term “person” does not include an enterprise (as defined in paragraph (6) of section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992).

Prohibition on Disclosure Clauses Null and Void

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

2.    (B)  No liability for disclosure under this subsection. A lender shall not have liability under any contractual provision for disclosure of a credit score pursuant to this subsection.

Conditions and form of disclosure to consumers [15 U.S.C. § 1681h]

1.    (a)  In General

(1) Proper identification. A consumer reporting agency shall require, as a condition of making the disclosures required under section 609 [§ 1681g], that the consumer furnish proper identification.

(2) Disclosure in writing. Except as provided in subsection (b), the disclosures required to be made under section 609 [§ 1681g] shall be provided under that section in writing.

2.    (b)  Other Forms of Disclosure

(1) In general. If authorized by a consumer, a consumer reporting agency may make the disclosures required under 609 [§ 1681g]

1.     (A)  other than in writing; and

2.    (B)  in such form as may be

1.    (i)  specified by the consumer in accordance with paragraph (2); and

2.    (ii)  available from the agency.

(2) Form. A consumer may specify pursuant to paragraph (1) that disclosures under section 609 [§ 1681g] shall be made

1.    (A)  in person, upon the appearance of the consumer at the place of business of the consumer reporting agency where disclosures are regularly provided, during normal business hours, and on reasonable notice;

2.    (B)  by telephone, if the consumer has made a written request for disclosure by telephone;

3.    (C)  by electronic means, if available from the agency; or

4.    (D)  by any other reasonable means that is available from the agency.

(c) Trained personnel. Any consumer reporting agency shall provide trained personnel to explain to the consumer any information furnished to him pursuant to section 609 [§ 1681g] of this title.

4.    (d)  Persons accompanying consumer. The consumer shall be permitted to be accompanied by one other person of his choosing, who shall furnish rea- sonable identification. A consumer reporting agency may require the consumer to furnish a written statement granting permission to the consumer reporting agency to discuss the consumer’s file in such person’s presence.

5.    (e)  Limitation of liability. Except as provided in sections 616 and 617 [§§ 1681n and 1681o] of this title, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer report- ing agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 609, 610, or 615 [§§ 1681g, 1681h, or 1681m] of this title or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report, except as to false information furnished with malice or willful intent to injure such consumer.

6.    § 611. Procedure in case of disputed accuracy [15 U.S.C. § 1681i]

(a) Reinvestigations of Disputed Information

1.    (1)  Reinvestigation Required

1.    (A)  In general. Subject to subsection (f), if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer or reseller.

2.    (B)  Extension of period to reinvestigate. Except as provided in subparagraph (c), the 30-day period described in subparagraph (A) may be extended for not more than 15 additional days if the consumer reporting agency receives information from the consumer during that 30-day period that is relevant to the reinvesti- gation.

3.    (C)  Limitations on extension of period to reinvestigate. Subparagraph (B) shall not apply to any reinvestigation in which, during the 30-day period described in subparagraph (A), the information that is the subject of the reinvestigation is found to be inaccurate or incomplete or the consumer reporting agency determines that the information cannot be verified.

2.    (2)  Prompt Notice of Dispute to Furnisher of Information

1.    (A)  In general. Before the expiration of the 5-business-day period beginning on the date on which a consumer reporting agency receives notice of a dispute from any consumer or a reseller in accordance with paragraph (1), the agency shall provide noti- fication of the dispute to any person who provided any item of information in dispute, at the address and in the manner es- tablished with the person. The notice shall include all relevant information regarding the dispute that the agency has received from the consumer or reseller.

2.    (B)  Provision of other information. The consumer reporting agency shall promptly provide to the person who provided the information in dispute all relevant information regarding the dispute that is received by the agency from the consumer or the reseller after the period referred to in subparagraph (A) and before the end of the period referred to in paragraph (1)(A).

(3) Determination That Dispute Is Frivolous or Irrelevant

1.    (A)  In general. Notwithstanding paragraph (1), a consumer reporting agency may terminate a reinvestigation of information disputed by a consumer under that paragraph if the agency reasonably determines that the dispute by the consumer is frivolous or irrelevant, including by reason of a failure by a consumer to provide sufficient information to investigate the disputed information.

2.    (B)  Notice of determination. Upon making any determination in accordance with subparagraph (A) that a dispute is frivolous or irrelevant, a consumer reporting agency shall notify the consumer of such determination not later than 5 business days after making such determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the agency.

3.    (C)  Contents of notice. A notice under subparagraph (B) shall include

(i) the reasons for the determination under subparagraph (A); and

(ii)i dentification of any information required to investigate the disputed information, which may consist of a standardized form describing the general nature of such information.

(4) Consideration of consumer information. In conducting any reinvesti- gation under paragraph (1) with respect to disputed information in the file of any consumer, the consumer reporting agency shall review and consider all relevant information submitted by the consumer in the period described in paragraph (1)(A) with respect to such disputed information.

(5) Treatment of Inaccurate or Unverifiable Information

(A) In general. If, after any reinvestigation under paragraph (1) of any information disputed by a consumer, an item of the information is found to be inaccurate or incomplete or cannot be verified, the consumer reporting agency shall–

(i) promptly delete that item of information from the file of the consumer, or modify that item of information, as appropriate, based on the results of the reinvestigation; and

(ii) promptly notify the furnisher of that information that the information has been modified or deleted from the file of the consumer.

2.    (B)  Requirements Relating to Reinsertion of Previously Deleted Material

1.    (i)  Certification of accuracy of information. If any information is deleted from a consumer’s file pursuant to subpara- graph (A), the information may not be reinserted in the file by the consumer reporting agency unless the person who furnishes the information certifies that the information is complete and accurate.

2.    (ii)  Notice to consumer. If any information that has been deleted from a consumer’s file pursuant to subparagraph (A) is reinserted in the file, the consumer reporting agency shall notify the consumer of the reinsertion in writing
not later than 5 business days after the reinsertion or, if authorized by the consumer for that purpose, by any other means available to the agency.

(iii) Additional information. As part of, or in addition to, the notice under clause (ii), a consumer reporting agency shall provide to a consumer in writing not later than 5 business days after the date of the reinsertion

3.    (I)  a statement that the disputed information has been reinserted;

4.    (II)  the business name and address of any furnisher of information contacted and the telephone number of such furnisher, if reasonably available, or of any furnisher of information that contacted the consumer reporting agency, in connection with the reinsertion of such information; and

5.    (III)  a notice that the consumer has the right to add a statement to the consumer’s file disputing the accuracy or completeness of the disputed information.

3.    (C)  Procedures to prevent reappearance. A consumer report-
ing agency shall maintain reasonable procedures designed to prevent the reappearance in a consumer’s file, and in consumer reports on the consumer, of information that is deleted pursuant to this paragraph (other than information that is reinserted in accordance with subparagraph (B)(i)).

 (D) Automated reinvestigation system. Any consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall implement an automated system through which furnishers of information to that consumer reporting agency may report the results of a reinvestigation that finds in- complete or inaccurate information in a consumer’s file to other such consumer reporting agencies.

(6) Notice of Results of Reinvestigation

1.    (A)  In general. A consumer reporting agency shall provide written notice to a consumer of the results of a reinvestigation under this subsection not later than 5 business days after the comple- tion of the reinvestigation, by mail or, if authorized by the consumer for that purpose, by other means available to the agency.

2.    (B)  Contents. As part of, or in addition to, the notice under sub- paragraph (A), a consumer reporting agency shall provide to a consumer in writing before the expiration of the 5-day period referred to in subparagraph (A)

1.    (i)  a statement that the reinvestigation is completed;

2.    (ii)  a consumer report that is based upon the consumer’s file as that file is revised as a result of the reinvestigation;

3.    (iii)  a notice that, if requested by the consumer, a descrip- tion of the procedure used to determine the accuracy and completeness of the information shall be provided to the consumer by the agency, including the business name and address of any furnisher of information contacted in connection with such information and the telephone number of such furnisher, if reasonably available;

4.    (iv)  a notice that the consumer has the right to add a statement to the consumer’s file disputing the accuracy or completeness of the information; and

5.    (v)  a notice that the consumer has the right to request under subsection (d) that the consumer reporting agency furnish notifications under that subsection.

(7) Description of reinvestigation procedure. A consumer reporting agency shall provide to a consumer a description referred to in para- graph (6)(B)(iii) by not later than 15 days after receiving a request from the consumer for that description.

 (8) Expedited dispute resolution. If a dispute regarding an item of information in a consumer’s file at a consumer reporting agency is resolved in accordance with paragraph (5)(A) by the deletion of the disputed information by not later than 3 business days after the date on which the agency receives notice of the dispute from the consumer in accordance with paragraph (1)(A), then the agency shall not be required to comply with paragraphs (2), (6), and (7) with respect to that dispute if the agency

1.    (A)  provides prompt notice of the deletion to the consumer by telephone;

2.    (B)  includes in that notice, or in a written notice that accompanies a confirmation and consumer report provided in accordance with subparagraph (C), a statement of the consumer’s right to re- quest under subsection (d) that the agency furnish notifications under that subsection; and

3.    (C)  provides written confirmation of the deletion and a copy of a consumer report on the consumer that is based on the consumer’s file after the deletion, not later than 5 business days after making the deletion.

2.    (b)  Statement of dispute. If the reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth the nature of the dispute. The consumer reporting agency may limit such statements to not more than one hundred words if it provides the consumer with assistance in writing a clear summary of the dispute.

3.    (c)  Notification of consumer dispute in subsequent consumer reports. Whenever a statement of a dispute is filed, unless there is reasonable grounds
to believe that it is frivolous or irrelevant, the consumer reporting agency shall, in any subsequent report containing the information in question, clearly note that it is disputed by the consumer and provide either the consumer’s statement or a clear and accurate codification or summary thereof.

4.    (d)  Notification of deletion of disputed information. Following any deletion of information which is found to be inaccurate or whose accuracy can no longer be verified or any notation as to disputed information, the consumer reporting agency shall, at the request of the consumer, furnish notification that the item has been deleted or the statement, codification or summary pursuant to subsection (b) or (c) of this section to any person specifically designated by the consumer who has within two years prior thereto re- ceived a consumer report for employment purposes, or within six months prior thereto received a consumer report for any other purpose, which contained the deleted or disputed information.

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5.    (e)  Treatment of Complaints and Report to Congress

1.    (1)  In general. The Bureau shall –

1.    (A)  compile all complaints that it receives that a file of a consumer that is maintained by a consumer reporting agency described in section 603(p) contains incomplete or inaccurate information, with respect to which, the consumer appears to have disputed the completeness or accuracy with the consumer reporting agency or otherwise utilized the procedures provided by subsection (a); and

2.    (B)  transmit each such complaint to each consumer reporting agency involved.

2.    (2)  Exclusion. Complaints received or obtained by the Bureau pursuant to its investigative authority under the Consumer Financial Protection Act of 2010 shall not be subject to paragraph (1).

3.    (3)  Agency responsibilities. Each consumer reporting agency described in section 603(p) that receives a complaint transmitted by the Bureau pursuant to paragraph (1) shall –

1.    (A)  review each such complaint to determine whether all legal ob- ligations imposed on the consumer reporting agency under this title (including any obligation imposed by an applicable court or administrative order) have been met with respect to the subject matter of the complaint;

2.    (B)  provide reports on a regular basis to the Bureau regarding the determinations of and actions taken by the consumer reporting agency, if any, in connection with its review of such com- plaints; and

3.    (C)  maintain, for a reasonable time period, records regarding the disposition of each such complaint that is sufficient to demon- strate compliance with this subsection.

4.    (4)  Rulemaking authority. The Bureau may prescribe regulations, as ap- propriate to implement this subsection.

5.    (5)  Annual report. The Bureau shall submit to the Committee on Bank- ing, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives an annual report regarding information gathered by the Bureau under this subsection.

6.    (f)  Reinvestigation Requirement Applicable to Resellers

(1) Exemption from general reinvestigation requirement. Except as pro- vided in paragraph (2), a reseller shall be exempt from the require- ments of this section.

(2) Action required upon receiving notice of a dispute. If a reseller receives a notice from a consumer of a dispute concerning the completeness or accuracy of any item of information contained in a consumer report on such consumer produced by the reseller, the reseller shall, within 5 business days of receiving the notice, and free of charge –

(A) determine whether the item of information is incomplete or inaccurate as a result of an act or omission of the reseller; and (B) (i) if the reseller determines that the item of information is incomplete or inaccurate as a result of an act or omission of the reseller, not later than 20 days after receiving the notice, correct the information in the consumer report or delete it; or

(ii) if the reseller determines that the item of information is not incomplete or inaccurate as a result of an act or omission of the reseller, convey the notice of the dispute, together with all relevant information provided by the consumer, to each consumer reporting agency that pro- vided the reseller with the information that is the subject of the dispute, using an address or a notification mecha- nism specified by the consumer reporting agency for such notices.

(3) Responsibility of consumer reporting agency to notify consumer through reseller. Upon the completion of a reinvestigation under this section of a dispute concerning the completeness or accuracy of any information in the file of a consumer by a consumer reporting agency that received notice of the dispute from a reseller under paragraph (2) –

1.    (A)  the notice by the consumer reporting agency under paragraph (6), (7), or (8) of subsection (a) shall be provided to the reseller in lieu of the consumer; and

2.    (B)  the reseller shall immediately reconvey such notice to the consumer, including any notice of a deletion by telephone in the manner required under paragraph (8)(A).

(4) Reseller reinvestigations. No provision of this subsection shall be construed as prohibiting a reseller from conducting a reinvestigation of a consumer dispute directly.

§ 612. Charges for certain disclosures [15 U.S.C. § 1681j]

See also 16 CFR Part 610 69 Fed. Reg. 35467 (06/24/04) 75 Fed. Reg. 9726 (03/03/10)

(a) Free Annual Disclosure
(1) Nationwide Consumer Reporting Agencies

1.    (A)  In general. All consumer reporting agencies described in subsections (p) and (w) of section 603 shall make all disclosures pursuant to section 609 once during any 12-month period upon request of the consumer and without charge to the consumer.

2.    (B)  Centralized source. Subparagraph (A) shall apply with respect to a consumer reporting agency described in section 603(p) only if the request from the consumer is made using the central- ized source established for such purpose in accordance with section 211(c) of the Fair and Accurate Credit Transactions Act of 2003.

3.    (C)  Nationwide Specialty Consumer Reporting Agency

1.    (i)  In general. The Bureau shall prescribe regulations appli- cable to each consumer reporting agency described in sec- tion 603(w) to require the establishment of a streamlined process for consumers to request consumer reports under subparagraph (A), which shall include, at a minimum, the establishment by each such agency of a toll-free telephone number for such requests.

2.    (ii)  Considerations. In prescribing regulations under clause (i), the Bureau shall consider–

1.    (I)  the significant demands that may be placed on consumer reporting agencies in providing such consumer reports;

2.    (II)  appropriate means to ensure that consumer report- ing agencies can satisfactorily meet those demands, including the efficacy of a system of staggering the availability to consumers of such consumer reports; and

3.    (III)  the ease by which consumers should be able to contact consumer reporting agencies with respect to access to such consumer reports.

(iii) Date of issuance. The Bureau shall issue the regulations required by this subparagraph in final form not later than 6 months after the date of enactment of the Fair and Accurate Credit Transactions Act of 2003.

(iv) Consideration of ability to comply. The regulations of the Bureau under this subparagraph shall establish an effective date by which each nationwide specialty consumer report- ing agency (as defined in section 603(w)) shall be required to comply with subsection (a), which effective date –

1.    (I)  shall be established after consideration of the abil- ity of each nationwide specialty consumer reporting agency to comply with subsection (a); and

2.    (II)  shall be not later than 6 months after the date on which such regulations are issued in final form (or such additional period not to exceed 3 months, as the Bureau determines appropriate).

2.    (2)  Timing. A consumer reporting agency shall provide a consumer report under paragraph (1) not later than 15 days after the date on which the request is received under paragraph (1).

3.    (3)  Reinvestigations. Notwithstanding the time periods specified in section 611(a)(1), a reinvestigation under that section by a consumer reporting agency upon a request of a consumer that is made after receiving a consumer report under this subsection shall be completed not later than 45 days after the date on which the request is received.

4.    (4)  Exception for first 12 months of operation. This subsection shall not apply to a consumer reporting agency that has not been furnish- ing consumer reports to third parties on a continuing basis during the 12-month period preceding a request under paragraph (1), with respect to consumers residing nationwide.

(b) Free disclosure after adverse notice to consumer. Each consumer reporting agency that maintains a file on a consumer shall make all disclosures pursuant to section 609 [§ 1681g] without charge to the consumer if, not later than 60 days after receipt by such consumer of a notification pursu- ant to section 615 [§ 1681m], or of a notification from a debt collection agency affiliated with that consumer reporting agency stating that the con-

7 Subsections 612(a)(1)(C)(iii) and (iv) are obsolete. They relate to the to the issuance and effective dates of the “free report” rules that the 2003 FACT Act required the Commission to publish. The rules were published on time in June 2004 and updated in March 2010. The subsections appear as written, including 2010 amendments to the FCRA that changed “Commission” to “Bureau” (effective July 21, 2011) in several places in the FCRA.

If a consumer’s credit rating may be or has been adversely affected, the consumer makes a request under section 609 [§ 1681g].

(c) Free disclosure under certain other circumstances. Upon the request of the consumer, a consumer reporting agency shall make all disclosures pursuant to section 609 [§ 1681g] once during any 12-month period with- out charge to that consumer if the consumer certifies in writing that the consumer

1.    (1)  is unemployed and intends to apply for employment in the 60-day period beginning on the date on which the certification is made;

2.    (2)  is a recipient of public welfare assistance; or

3.    (3)  has reason to believe that the file on the consumer at the agency contains inaccurate information due to fraud.

4.    (d)  Free disclosures in connection with fraud alerts. Upon the request of a consumer, a consumer reporting agency described in section 603(p) shall make all disclosures pursuant to section 609 without charge to the consumer, as provided in subsections (a)(2) and (b)(2) of section 605A, as applicable.

5.    (e)  Other charges prohibited. A consumer reporting agency shall not impose any charge on a consumer for providing any notification required by this title or making any disclosure required by this title, except as authorized by subsection (f).

6.    (f)  Reasonable Charges Allowed for Certain Disclosures

(1) In general. In the case of a request from a consumer other than a re- quest that is covered by any of subsections (a) through (d), a consumer reporting agency may impose a reasonable charge on a consumer

1.    (A)  for making a disclosure to the consumer pursuant to section 609 [§ 1681g], which charge

1.    (i)  shall not exceed $8; and

2.    (ii)  shall be indicated to the consumer before making the disclosure; and

2.    (B)  for furnishing, pursuant to 611(d) [§ 1681i], following a reinvestigation under section 611(a) [§ 1681i], a statement, codification, or summary to a person designated by the consumer under that section after the 30-day period beginning on the date of notification of the consumer under paragraph (6) or (8)

8 Pursuant to Section 612(f)(2), the Federal Trade Commission set the maximum charge at $11.00, effective January 1, 2011. See 75 Fed. Reg. 80817 (Dec. 23, 2010). The Bureau will set the charge for 2012 and later years.

§ 613 - 15 U.S.C. § 1681k of section 611(a) [§ 1681i] with respect to the reinvestigation, which charge

1.    (i)  shall not exceed the charge that the agency would impose on each designated recipient for a consumer report; and

2.    (ii)  shall be indicated to the consumer before furnishing such information.

(2) Modification of amount. The Bureau shall increase the amount referred to in paragraph (1)(A)(i) on January 1 of each year, based proportionally on changes in the Consumer Price Index, with fractional changes rounded to the nearest fifty cents.

(g) Prevention of Deceptive Marketing of Credit Reports

§ 613.

In general. Subject to rulemaking pursuant to section 205(b) of
the Credit CARD Act of 2009, any advertisement for a free credit report in any medium shall prominently disclose in such advertisement that free credit reports are available under Federal law at Annual Credit Report.com (or such other source as may be authorized under Federal law).

Television and radio advertisement. In the case of an advertisement broadcast by television, the disclosures required under paragraph (1) shall be included in the audio and visual part of such advertisement. In the case of an advertisement broadcast by television or radio, the disclosure required under paragraph (1) shall consist only of the following: “This is not the free credit report provided for by Federal law.’’

Public record information for employment purposes [15 U.S.C. § 1681k]

(a) In general. A consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer’s ability to obtain employment shall

1.    (1)  at the time such public record information is reported to the user of such consumer report, notify the consumer of the fact that public re- cord information is being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported; or

2.    (2)  maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a

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consumer’s ability to obtain employment is reported it is complete and up to date. For purposes of this paragraph, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item at the time of the report is reported.

(b) Exemption for national security investigations. Subsection (a) does not apply in the case of an agency or department of the United States Government that seeks to obtain and use a consumer report for employment purposes, if the head of the agency or department makes a written finding as prescribed under section 604(b)(4)(A).

§ 614. Restrictions on investigative consumer reports [15 U.S.C. § 1681l]

Whenever a consumer reporting agency prepares an investigative consumer report, no adverse information in the consumer report (other than information which is a matter of public record) may be included in a subsequent consumer report unless such adverse information has been verified in the process of making such subsequent consumer report, or the adverse information was received within the three-month period preceding the date the subsequent report is furnished.

§ 615. Requirements on users of consumer reports [15 U.S.C. § 1681m]

(a) Duties of users taking adverse actions on the basis of information contained in consumer reports. If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall

1.    (1)  provide oral, written, or electronic notice of the adverse action to the consumer;

2.    (2)  provide to the consumer written or electronic disclosure

1.    (A)  of a numerical credit score as defined in section 609(f)(2)
(A) used by such person in taking any adverse action based in whole or in part on any information in a consumer report; and

2.    (B)  of the information set forth in subparagraphs (B) through (E) of section 609(f)(1);

3.    (3)  provide to the consumer orally, in writing, or electronically

(A) the name, address, and telephone number of the consumer re- porting agency (including a toll-free telephone number estab- lished by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person; and

(B) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken; and

(4) provide to the consumer an oral, written, or electronic notice of the consumer’s right

1.    (A)  to obtain, under section 612 [§ 1681j], a free copy of a consumer report on the consumer from the consumer reporting agency referred to in paragraph (3), which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and

2.    (B)  to dispute, under section 611 [§ 1681i], with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency.

(b) Adverse Action Based on Information Obtained from Third Parties Other than Consumer Reporting Agencies

(1) In general. Whenever credit for personal, family, or household purposes involving a consumer is denied or the charge for such credit is increased either wholly or partly because of information obtained from a person other than a consumer reporting agency bearing upon the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of such information shall, within a reasonable period of time, upon the consumer’s written request for the reasons for such adverse action received within sixty days after learning of such ad- verse action, disclose the nature of the information to the consumer. The user of such information shall clearly and accurately disclose to the consumer his right to make such written request at the time such adverse action is communicated to the consumer.

(2) Duties of Person Taking Certain Actions Based on Information Provided by Affiliate

(A) Duties, generally. If a person takes an action described in subparagraph (B) with respect to a consumer, based in whole or in part on information described in subparagraph (c), the person shall

1.     (i)  notify the consumer of the action, including a statement that the consumer may obtain the information in accor- dance with clause (ii); and

2.    (ii)  upon a written request from the consumer received within 60 days after transmittal of the notice required by clause (i), disclose to the consumer the nature of the information upon which the action is based by not later than 30 days after receipt of the request.

2.    (B)  Action described. An action referred to in subparagraph (A) is an adverse action described in section 603(k)(1)(A) [§ 1681a], taken in connection with a transaction initiated by the consumer, or any adverse action described in clause (i) or (ii) of section 603(k)(1)(B) [§ 1681a].

3.    (C)  Information described. Information referred to in subparagraph (A)

1.    (i)  except as provided in clause (ii), is information that

1.    (I)  is furnished to the person taking the action by a person related by common ownership or affiliated by common corporate control to the person taking the action; and

2.    (II)  bears on the credit worthiness, credit standing, credit capacity, character, general reputation, personal char- acteristics, or mode of living of the consumer; and

2.    (ii)  does not include

1.    (I)  information solely as to transactions or experiences between the consumer and the person furnishing the information; or

2.    (II)  information in a consumer report.

(c) Reasonable procedures to assure compliance. No person shall be held li- able for any violation of this section if he shows by a preponderance of the evidence that at the time of the alleged violation he maintained reasonable procedures to assure compliance with the provisions of this section.

(d) Duties of Users Making Written Credit or Insurance Solicitations on the Basis of Information Contained in Consumer Files

(1) In general. Any person who uses a consumer report on any consumer in connection with any credit or insurance transaction that is not initiated by the consumer, that is provided to that person under section 604(c)(1)(B) [§ 1681b], shall provide with each written solicitation made to the consumer regarding the transaction a clear and conspicuous statement that

1.    (A)  information contained in the consumer’s consumer report was used in connection with the transaction;

2.    (B)  the consumer received the offer of credit or insurance because the consumer satisfied the criteria for credit worthiness or in- surability under which the consumer was selected for the offer;

3.    (C)  if applicable, the credit or insurance may not be extended if, after the consumer responds to the offer, the consumer does not meet the criteria used to select the consumer for the offer or any applicable criteria bearing on credit worthiness or insurability or does not furnish any required collateral;

4.    (D)  the consumer has a right to prohibit information contained in the consumer’s file with any consumer reporting agency from being used in connection with any credit or insurance transaction that is not initiated by the consumer; and

5.    (E)  the consumer may exercise the right referred to in subparagraph (D) by notifying a notification system established under section 604(e) [§ 1681b].

(2) Disclosure of address and telephone number; format. A statement under paragraph (1) shall –

1.    (A)  include the address and toll-free telephone number of the appropriate notification system established under section 604(e); and

2.    (B)  be presented in such format and in such type size and manner as to be simple and easy to understand, as established by the Bureau, by rule, in consultation with the Federal Trade Com- mission, Federal banking agencies and the National Credit Union Administration.

See also 16 CFR Part 642 16 CFR Part 698 App A 70 Fed. Reg. 5022 (01/31/05)

(3) Maintaining criteria on file. A person who makes an offer of credit or insurance to a consumer under a credit or insurance transaction described in paragraph (1) shall maintain on file the criteria used to select the consumer to receive the offer, all criteria bearing on credit worthiness or insurability, as applicable, that are the basis for determining whether or not to extend credit or insurance pursuant to the offer, and any requirement for the furnishing of collateral as a condition of the extension of credit or insurance, until the expiration of the 3-year period beginning on the date on which the offer is made to the consumer.

(4) Authority of federal agencies regarding unfair or deceptive acts or practices not affected. This section is not intended to affect the authority of any Federal or State agency to enforce a prohibition against unfair or deceptive acts or practices, including the making of false or misleading statements in connection with a credit or insurance transaction that is not initiated by the consumer.

See also 16 CFR Part 681 72 Fed. Reg. 63772-74 (11/09/07) 74 Fed. Reg. 22640-41 (05/14/09)

(e) Red Flag Guidelines and Regulations Required (1) Guidelines. The Federal banking agencies, the National Credit Union Administration, the Federal Trade Commission, the Commodity Futures Trading Commission, and the Securities and Exchange Commission shall jointly, with respect to the entities that are subject to their respective enforcement authority under section 621 –

1.    (A)  establish and maintain guidelines for use by each financial in- stitution and each creditor regarding identity theft with respect to account holders at, or customers of, such entities, and update such guidelines as often as necessary;

2.    (B)  prescribe regulations requiring each financial institution and each creditor to establish reasonable policies and procedures for implementing the guidelines established pursuant to sub- paragraph (A), to identify possible risks to account holders or customers or to the safety and soundness of the institution or customers; and

3.    (C)  prescribe regulations applicable to card issuers to ensure that, if a card issuer receives notification of a change of address for an existing account, and within a short period of time (during at least the first 30 days after such notification is received) receives a request for an additional or replacement card for the same account, the card issuer may not issue the additional or replacement card, unless the card issuer, in accordance with reasonable policies and procedures –

(i) notifies the cardholder of the request at the former address of the cardholder and provides to the cardholder a means of promptly reporting incorrect address changes;

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

3.    (iii)  uses other means of assessing the validity of the change of address, in accordance with reasonable policies and procedures established by the card issuer in accordance with the regulations prescribed under subparagraph (B).

(2) Criteria

1.    (A)  In general. In developing the guidelines required by paragraph (1)(A), the agencies described in paragraph (1) shall identify patterns, practices, and specific forms of activity that indicate the possible existence of identity theft.

2.    (B)  Inactive accounts. In developing the guidelines required by paragraph (1)(A), the agencies described in paragraph (1) shall consider including reasonable guidelines providing that when a transaction occurs with respect to a credit or deposit account that has been inactive for more than 2 years, the creditor or financial institution shall follow reasonable policies and procedures that provide for notice to be given to a consumer in a manner reasonably designed to reduce the likelihood of identity theft with respect to such account.

(3) Consistency with verification requirements. Guidelines established pursuant to paragraph (1) shall not be inconsistent with the policies and procedures required under section 5318(l) of title 31, United States Code.

(4) Definitions. As used in this subsection, the term “creditor” –

(A) means a creditor, as defined in section 702 of the Equal Credit Opportunity Act (15 U.S.C. 1691a), that regularly and in the ordinary course of business

1.    (i)  obtains or uses consumer reports, directly or indirectly, in connection with a credit transaction;

2.    (ii)  furnishes information to consumer reporting agencies, as described in section 623, in connection with a credit trans- action; or

3.    (iii)  advances funds to or on behalf of a person, based on an obligation of the person to repay the funds or repayable from specific property pledged by or on behalf of the per- son;

2.     (B)  does not include a creditor described in subparagraph (A)(iii) that advances funds on behalf of a person for expenses incidental to a service provided by the creditor to that person; and

3.    (C)  includes any other type of creditor, as defined in that section 702, as the agency described in paragraph (1) having authority over that creditor may determine appropriate by rule promulgated by that agency, based on a determination that such credi- tor offers or maintains accounts that are subject to a reasonably foreseeable risk of identity theft.

6.    (f)  Prohibition on Sale or Transfer of Debt Caused by Identity Theft

1.    (1)  In general. No person shall sell, transfer for consideration, or place for collection a debt that such person has been notified under section 605B has resulted from identity theft.

2.    (2)  Applicability. The prohibitions of this subsection shall apply to all persons collecting a debt described in paragraph (1) after the date of a notification under paragraph (1).

3.    (3)  Rule of construction. Nothing in this subsection shall be construed to prohibit –

1.    (A)  the repurchase of a debt in any case in which the assignee of the debt requires such repurchase because the debt has resulted from identity theft;

2.    (B)  the securitization of a debt or the pledging of a portfolio of debt as collateral in connection with a borrowing; or

3.    (C)  the transfer of debt as a result of a merger, acquisition, purchase and assumption transaction, or transfer of substantially all of the assets of an entity.

7.    (g)  Debt collector communications concerning identity theft. If a person acting as a debt collector (as that term is defined in title VIII) on behalf of a third party that is a creditor or other user of a consumer report is notified that any information relating to a debt that the person is attempting to collect

may be fraudulent or may be the result of identity theft, that person shall –

1.    (1)  notify the third party that the information may be fraudulent or may be the result of identity theft; and

2.    (2)  upon request of the consumer to whom the debt purportedly relates, provide to the consumer all information to which the consumer would otherwise be entitled if the consumer were not a victim of identity theft, but wished to dispute the debt under provisions of law appli- cable to that person.

(h) Duties of Users in Certain Credit Transactions

1.    (1)  In general. Subject to rules prescribed as provided in paragraph
(6), if any person uses a consumer report in connection with an application for, or a grant, extension, or other provision of, credit on material terms that are materially less favorable than the most favor- able terms available to a substantial proportion of consumers from or through that person, based in whole or in part on a consumer report, the person shall provide an oral, written, or electronic notice to the consumer in the form and manner required by regulations prescribed in accordance with this subsection.

2.    (2)  Timing. The notice required under paragraph (1) may be provided at the time of an application for, or a grant, extension, or other provision of, credit or the time of communication of an approval of an ap- plication for, or grant, extension, or other provision of, credit, except as provided in the regulations prescribed under paragraph (6).

3.    (3)  Exceptions. No notice shall be required from a person under this subsection if –

1.    (A)  the consumer applied for specific material terms and was grant- ed those terms, unless those terms were initially specified by the person after the transaction was initiated by the consumer and after the person obtained a consumer report; or

2.    (B)  the person has provided or will provide a notice to the consumer under subsection (a) in connection with the transaction.

4.    (4)  Other notice not sufficient. A person that is required to provide a notice under subsection (a) cannot meet that requirement by providing a notice under this subsection.

5.    (5)  Content and delivery of notice. A notice under this subsection shall, at a minimum –

1.    (A)  include a statement informing the consumer that the terms offered to the consumer are set based on information from a consumer report;

2.    (B)  identify the consumer reporting agency furnishing the report;

3.    (C)  include a statement informing the consumer that the consumer may obtain a copy of a consumer report from that consumer reporting agency without charge;

4.    (D)  include the contact information specified by that consumer re- porting agency for obtaining such consumer reports (including a toll-free telephone number established by the agency in the case of a consumer reporting agency described in section 603(p)); and

(E) include a statement informing the consumer of –

1.    (i)  a numerical credit score as defined in section 609(f)(2) (A), used by such person in making the credit decision described in paragraph (1) based in whole or in part on any information in a consumer report; and

2.    (ii)  the information set forth in subparagraphs (B) through (E) of section 609(f)(1).

See also 16 CFR Part 610 75 Fed. Reg. 2724 (01/15/10)

(6) Rulemaking

1.    (A)  Rules required. The Bureau shall prescribe rules to carry out this subsection.

2.    (B)  Content. Rules required by subparagraph (A) shall address, but are not limited to –

1.    (i)  the form, content, time, and manner of delivery of any notice under this subsection;

2.    (ii)  clarification of the meaning of terms used in this subsection, including what credit terms are material, and when credit terms are materially less favorable;

3.    (iii)  exceptions to the notice requirement under this subsection for classes of persons or transactions regarding which the agencies determine that notice would not significantly benefit consumers;

4.    (iv)  a model notice that may be used to comply with this subsection; and

5.    (v)  the timing of the notice required under paragraph (1), including the circumstances under which the notice must be provided after the terms offered to the consumer were set based on information from a consumer report.

(7) Compliance. A person shall not be liable for failure to perform the duties required by this section if, at the time of the failure, the person maintained reasonable policies and procedures to comply with this section.

(8) Enforcement

§ 616.

1.    (A)  No civil actions. Sections 616 and 617 shall not apply to any failure by any person to comply with this section.

2.    (B)  Administrative enforcement. This section shall be enforced exclusively under section 621 by the Federal agencies and officials identified in that section.

Civil liability for willful noncompliance [15 U.S.C. § 1681n]

(a) In general. Any person who willfully fails to comply with any requirement imposed under this title with respect to any consumer is liable to that consumer in an amount equal to the sum of (1) (A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; or

(B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

2.    (2)  such amount of punitive damages as the court may allow; and

3.    (3)  in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney’s fees as determined by the court.

2.    (b)  Civil liability for knowing noncompliance. Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose shall be liable to the consumer reporting agency for actual damages sustained by the consumer reporting agency or $1,000, whichever is greater.

3.    (c)  Attorney’s fees. Upon a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney’s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

4.    (d)  Clarification of willful noncompliance. For the purposes of this section, any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale or transaction between December 4, 2004, and the date of the enactment of this subsection but otherwise complied with the requirements of section 605(g) for such receipt shall not be in willful noncompliance with section 605(g) by reason of printing such expiration date on the receipt.

§ 617. Civil liability for negligent noncompliance [15 U.S.C. § 1681o]

1.    (a)  In general. Any person who is negligent in failing to comply with any requirement imposed under this title with respect to any consumer is liable to that consumer in an amount equal to the sum of

1.    (1)  any actual damages sustained by the consumer as a result of the failure; and

2.    (2)  in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney’s fees as determined by the court.

2.    (b)  Attorney’s fees. On a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney’s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

§ 618. Jurisdiction of courts; limitation of actions [15 U.S.C. § 1681p]

An action to enforce any liability created under this title may be brought in any appropriate United States district court, without regard to the amount in controversy, or in any other court of competent jurisdiction, not later than the earlier of (1) 2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability; or (2) 5 years after the date on which the violation that is the basis for such liability occurs.

§ 619. Obtaining information under false pretenses [15 U.S.C. § 1681q]

Any person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both.

§ 620. Unauthorized disclosures by officers or employees [15 U.S.C. § 1681r]

Any officer or employee of a consumer reporting agency who knowingly and willfully provides information concerning an individual from the agency’s files to a person not authorized to receive that information shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both.

§ 621. Administrative enforcement [15 U.S.C. § 1681s]

(a) Enforcement by Federal Trade Commission.

1.    (1)  In General. The Federal Trade Commission shall be authorized
to enforce compliance with the requirements imposed by this title under the Federal Trade Commission Act (15 U.S.C. 41 et seq.), with respect to consumer reporting agencies and all other persons subject thereto, except to the extent that enforcement of the requirements imposed under this title is specifically committed to some
other Government agency under any of subparagraphs (A) through (G) of subsection (b)(1), and subject to subtitle B of the Consumer Financial Protection Act of 2010, subsection (b). For the purpose of the exercise by the Federal Trade Commission of its functions and powers under the Federal Trade Commission Act, a violation of any requirement or prohibition imposed under this title shall constitute an unfair or deceptive act or practice in commerce, in violation of section 5(a) of the Federal Trade Commission Act (15 U.S.C. 45(a)), and shall be subject to enforcement by the Federal Trade Commission under section 5(b) of that Act with respect to any consumer reporting agency or person that is subject to enforcement by the Federal Trade Commission pursuant to this subsection, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests under the Federal Trade Commission Act. The Federal Trade Com- mission shall have such procedural, investigative, and enforcement powers, including the power to issue procedural rules in enforcing compliance with the requirements imposed under this title and to require the filing of reports, the production of documents, and the appearance of witnesses, as though the applicable terms and conditions of the Federal Trade Commission Act were part of this title. Any person violating any of the provisions of this title shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act as though the applicable terms and provisions of such Act are part of this title.

2.    (2)  Penalties

(A) Knowing Violations. Except as otherwise provided by subtitle B of the Consumer Financial Protection Act of 2010, in the event of a knowing violation, which constitutes a pattern or practice of violations of this title, the Federal Trade Commission may commence a civil action to recover a civil penalty in a district court of the United States against any person that violates this title. In such action, such person shall be liable for a civil penalty of not more than $2,500 per violation.

2.    (B)  Determining Penalty Amount. In determining the amount of a civil penalty under subparagraph (A), the court shall take into ac- count the degree of culpability, any history of such prior conduct, ability to pay, effect on ability to continue to do business, and such other matters as justice may require.

3.    (C)  Limitation. Notwithstanding paragraph (2), a court may not impose any civil penalty on a person for a violation of section 623(a)(1), unless the person has been enjoined from committing the violation, or ordered not to commit the violation, in an action or proceeding brought by or on behalf of the Federal Trade Commission, and has violated the injunction or order, and the court may not impose any civil penalty for any violation occurring before the date of the violation of the injunction or order

(b) Enforcement by Other Agencies.

(1) In General. Subject to subtitle B of the Consumer Financial Protection Act of 2010, compliance with the requirements imposed under this title with respect to consumer reporting agencies, persons who use consumer reports from such agencies, persons who furnish information to such agencies, and users of information that are subject to section 615(d) shall be enforced under –

(A) section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), by the appropriate Federal banking agency, as defined in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect to –

1.    (i)  any national bank or State savings association, and any Federal branch or Federal agency of a foreign bank;

2.    (ii)  any member bank of the Federal Reserve System (other than a national bank), a branch or agency of a foreign bank (other than a Federal branch, Federal agency, or insured State branch of a foreign bank), a commercial lending company owned or controlled by a foreign bank, and any organization operating under section 25 or 25A of the Federal Reserve Act; and

3.    (iii)  any bank or Federal savings association insured by the Federal Deposit Insurance Corporation (other than a mem-

9 Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, the Federal Trade Commission increased the maximum civil penalty to $3,500 per violation. See 74 Fed. Reg. 857 (Jan. 9, 2009).

Member of the Federal Reserve System) and any insured State branch of a foreign bank;

2.    (B)  the Federal Credit Union Act (12 U.S.C. 1751 et seq.), by the Administrator of the National Credit Union Administration with respect to any Federal credit union;

3.    (C)  subtitle IV of title 49, United States Code, by the Secretary of Transportation, with respect to all carriers subject to the juris- diction of the Surface Transportation Board;

4.    (D)  the Federal Aviation Act of 1958 (49 U.S.C. App. 1301 et seq.), by the Secretary of Transportation, with respect to any air carrier or foreign air carrier subject to that Act;

5.    (E)  the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et seq.) (except as provided in section 406 of that Act), by the Secretary of Agriculture, with respect to any activities subject to that Act;

6.    (F)  the Commodity Exchange Act, with respect to a person subject to the jurisdiction of the Commodity Futures Trading Commission;

7.    (G)  the Federal securities laws, and any other laws that are subject to the jurisdiction of the Securities and Exchange Commission, with respect to a person that is subject to the jurisdiction of the Securities and Exchange Commission; and

8.    (H)  subtitle E of the Consumer Financial Protection Act of 2010, by the Bureau, with respect to any person subject to this title.

(2) Incorporated Definitions. The terms used in paragraph (1) that are not defined in this title or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. 1813(s)) have the same meanings as in section 1(b) of the International Banking Act of 1978 (12 U.S.C. 3101).

(c) State Action for Violations

(1) Authority of states. In addition to such other remedies as are provid- ed under State law, if the chief law enforcement officer of a State, or an official or agency designated by a State, has reason to believe that any person has violated or is violating this title, the State –

1.    (A)  may bring an action to enjoin such violation in any appropriate United States district court or in any other court of competent jurisdiction;

2.    (B)  subject to paragraph (5), may bring an action on behalf of the residents of the State to recover

1.     (i)  damages for which the person is liable to such residents under sections 616 and 617 [§§ 1681n and 1681o] as a result of the violation;

2.    (ii)  in the case of a violation described in any of paragraphs (1) through (3) of section 623(c) [§ 1681s-2], damages for which the person would, but for section 623(c), be liable to such residents as a result of the violation; or

3.    (iii)  damages of not more than $1,000 for each willful or negligent violation; and

(C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and reasonable attorney fees as determined by the court.

(2) Rights of federal regulators. The State shall serve prior written notice of any action under paragraph (1) upon the Bureau and the Federal Trade Commission or the appropriate Federal regulator determined under subsection (b) and provide the Bureau and the Federal Trade Commission or appropriate Federal regulator with a copy of

its complaint, except in any case in which such prior notice is not feasible, in which case the State shall serve such notice immediately upon instituting such action. The Bureau and the Federal Trade Com- mission or appropriate Federal regulator shall have the right –

1.    (A)  to intervene in the action;

2.    (B)  upon so intervening, to be heard on all matters arising therein;

3.    (C)  to remove the action to the appropriate United States district court; and

4.    (D)  to file petitions for appeal.

(3) Investigatory powers. For purposes of bringing any action under this subsection, nothing in this subsection shall prevent the chief law enforcement officer, or an official or agency designated by a State, from exercising the powers conferred on the chief law enforcement officer or such official by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the production of documentary and other evidence.

(4) Limitation on state action while federal action pending. If the Bureau, the Federal Trade Commission, or the appropriate Federal regulator has instituted a civil action or an administrative action un- der section 8 of the Federal Deposit Insurance Act for a violation of

this title, no State may, during the pendency of such action, bring an action under this section against any defendant named in the com- plaint of the Bureau, the Federal Trade Commission, or the appropri- ate Federal regulator for any violation of this title that is alleged in that complaint.

(5) Limitations on State Actions for Certain Violations

1.    (A)  Violation of injunction required. A State may not bring an action against a person under paragraph (1)(B) for a violation described in any of paragraphs (1) through (3) of section 623(c), unless

1.    (i)  the person has been enjoined from committing the violation, in an action brought by the State under paragraph (1) (A); and

2.    (ii)  the person has violated the injunction.

2.    (B)  Limitation on damages recoverable. In an action against a person under paragraph (1)(B) for a violation described in any of paragraphs (1) through (3) of section 623(c), a State may not recover any damages incurred before the date of the violation of an injunction on which the action is based.

4.    (d)  Enforcement under other authority. For the purpose of the exercise by any agency referred to in subsection (b) of this section of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this title shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b) of this section, each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this title any other authority conferred on it by law.

5.    (e)  Regulatory Authority

(1) In General. The Bureau shall prescribe such regulations as are necessary to carry out the purposes of this title, except with respect to sections 615(e) and 628. The Bureau may prescribe regulations as may be necessary or appropriate to administer and carry out the purposes and objectives of this title, and to prevent evasions thereof or to facilitate compliance therewith. Except as provided in section 1029(a) of the Consumer Financial Protection Act of 2010, the regulations prescribed by the Bureau under this title shall apply to any person that is subject to this title, notwithstanding the enforcement authorities granted to other agencies under this section.

 (2) Deference. Notwithstanding any power granted to any Federal agency under this title, the deference that a court affords to a Federal agency with respect to a determination made by such agency relating to the meaning or interpretation of any provision of this title that is subject to the jurisdiction of such agency shall be applied as if that agency were the only agency authorized to apply, enforce, interpret, or administer the provisions of this title The regulations prescribed by the Bureau under this title shall apply to any person that is subject to this title, notwithstanding the enforcement authorities granted to other agencies under this section.

6.    (f)  Coordination of Consumer Complaint Investigations

1.    (1)  In general. Each consumer reporting agency described in section 603(p) shall develop and maintain procedures for the referral to each other such agency of any consumer complaint received by the agency alleging identity theft, or requesting a fraud alert under section 605A or a block under section 605B.

2.    (2)  Model form and procedure for reporting identity theft. The Bureau, in consultation with the Federal Trade Commission, the Federal banking agencies, and the National Credit Union Administration, shall develop a model form and model procedures to be used by consumers who are victims of identity theft for contacting and informing creditors and consumer reporting agencies of the fraud.

See also 70 Fed.Reg. 21792 (04/27/05)

3.    (3)  Annual summary reports. Each consumer reporting agency described in section 603(p) shall submit an annual summary report to the Bu- reau on consumer complaints received by the agency on identity theft or fraud alerts.

7.    (g)  Bureau regulation of coding of trade names. If the Bureau determines that a person described in paragraph (9) of section 623(a) has not met the requirements of such paragraph, the Bureau shall take action to ensure the person’s compliance with such paragraph, which may include issuing model guidance or prescribing reasonable policies and procedures, as necessary to ensure that such person complies with such paragraph.

§ 622. Information on overdue child support obligations [15 U.S.C. § 1681s-1]

Notwithstanding any other provision of this title, a consumer reporting agency shall include in any consumer report furnished by the agency in accordance with section 604 [§ 1681b] of this title, any information on the failure of the consumer to pay overdue support which (1) (2) § 623. is provided

1.    (A)  to the consumer reporting agency by a State or local child support enforcement agency; or

2.    (B)  to the consumer reporting agency and verified by any local, State, or Federal government agency; and

antedates the report by 7 years or less.

Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]

(a) Duty of Furnishers of Information to Provide Accurate Information (1) Prohibition

1.    (A)  Reporting information with actual knowledge of errors. A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.

2.    (B)  Reporting information after notice and confirmation of errors. A person shall not furnish information relating to a consumer to any consumer reporting agency if

1.    (i)  the person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and

2.    (ii)  the information is, in fact, inaccurate.

3.    (C)  No address requirement. A person who clearly and conspicuously specifies to the consumer an address for notices referred to in subparagraph (B) shall not be subject to subparagraph (A); however, nothing in subparagraph (B) shall require a person to specify such an address.

4.    (D)  Definition. For purposes of subparagraph (A), the term “reasonable cause to believe that the information is inaccurate” means having specific knowledge, other than solely allegations by the consumer, that would cause a reasonable person to have substantial doubts about the accuracy of the information.

(2) Duty to correct and update information. A person who

1.    (A)  regularly and in the ordinary course of business furnishes information to one or more consumer reporting agencies about the person’s transactions or experiences with any consumer; and

2.    (B)  has furnished to a consumer reporting agency information
that the person determines is not complete or accurate, shall promptly notify the consumer reporting agency of that determi- nation and provide to the agency any corrections to that infor- mation, or any additional information, that is necessary to make the information provided by the person to the agency complete and accurate, and shall not thereafter furnish to the agency any of the information that remains not complete or accurate.

(3) Duty to provide notice of dispute. If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.

(4) Duty to provide notice of closed accounts. A person who regularly and in the ordinary course of business furnishes information to a consumer reporting agency regarding a consumer who has a credit ac- count with that person shall notify the agency of the voluntary closure of the account by the consumer, in information regularly furnished for the period in which the account is closed.

(5) Duty to Provide Notice of Delinquency of Accounts

1.    (A)  In general. A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall, not later than 90 days after furnishing the information, notify the agency of the date of delinquency on the account, which shall be the month and year of the commencement of the delinquency on the account that immediately preceded the action.

2.    (B)  Rule of construction. For purposes of this paragraph only, and provided that the consumer does not dispute the information, a person that furnishes information on a delinquent account that is placed for collection, charged for profit or loss, or subjected to any similar action, complies with this paragraph, if –

1.    (i)  the person reports the same date of delinquency as that provided by the creditor to which the account was owed at the time at which the commencement of the delinquency occurred, if the creditor previously reported that date of delinquency to a consumer reporting agency;

2.    (ii)  the creditor did not previously report the date of delin- quency to a consumer reporting agency, and the person establishes and follows reasonable procedures to obtain the date of delinquency from the creditor or another reliable source and reports that date to a consumer reporting agency as the date of delinquency; or

3.    (iii)  the creditor did not previously report the date of delinquency to a consumer reporting agency and the date of delinquency cannot be reasonably obtained as provided in clause (ii), the person establishes and follows reasonable procedures to ensure the date reported as the date of delinquency precedes the date on which the account is placed for collection, charged to profit or loss, or subjected to any similar action, and reports such date to the credit reporting agency.

(6) Duties of Furnishers Upon Notice of Identity Theft-Related Information

1.    (A)  Reasonable procedures. A person that furnishes information to any consumer reporting agency shall have in place reasonable procedures to respond to any notification that it receives from
a consumer reporting agency under section 605B relating to information resulting from identity theft, to prevent that person from refurnishing such blocked information.

2.    (B)  Information alleged to result from identity theft. If a consumer submits an identity theft report to a person who furnishes information to a consumer reporting agency at the address specified by that person for receiving such reports stating that information maintained by such person that purports to relate to the consumer resulted from identity theft, the person may not furnish such information that purports to relate to the consumer to any consumer reporting agency, unless the person subsequently knows or is informed by the consumer that the information is correct.

 (7) Negative Information

1.    (A)  Notice to Consumer Required

1.    (i)  In general. If any financial institution that extends credit and regularly and in the ordinary course of business furnishes information to a consumer reporting agency described in section 603(p) furnishes negative information to such an agency regarding credit extended to a customer, the financial institution shall provide a notice of such furnishing of negative information, in writing, to the customer.

2.    (ii)  Notice effective for subsequent submissions. After providing such notice, the financial institution may submit additional negative information to a consumer reporting agency described in section 603(p) with respect to the same transaction, extension of credit, account, or customer without providing additional notice to the customer.

2.    (B)  Time of Notice

1.    (i)  In general. The notice required under subparagraph (A) shall be provided to the customer prior to, or no later than 30 days after, furnishing the negative information to a consumer reporting agency described in section 603(p).

2.    (ii)  Coordination with new account disclosures. If the notice is provided to the customer prior to furnishing the negative information to a consumer reporting agency, the no- tice may not be included in the initial disclosures provided under section 127(a) of the Truth in Lending Act.

3.    (C)  Coordination with other disclosures. The notice required under subparagraph (A) –

1.    (i)  may be included on or with any notice of default, any billing statement, or any other materials provided to the customer; and

2.    (ii)  must be clear and conspicuous.

See also 12 CFR Part 222, App B 70 Fed. Reg. 33281 (06/15/04)

4.    (D)  Model Disclosure

(i) Duty of Bureau. The Bureau shall prescribe a brief model disclosure that a financial institution may use to comply with subparagraph (A), which shall not exceed 30 words.

(ii) Use of model not required. No provision of this paragraph may be construed to require a financial institution to use any such model form prescribed by the Bureau.

(iii) Compliance using model. A financial institution shall be deemed to be in compliance with subparagraph (A) if the financial institution uses any model form prescribed by the Bureau under this subparagraph, or the financial institution uses any such model form and rearranges its format.

5.    (E)  Use of notice without submitting negative information. No provision of this paragraph shall be construed as requiring a financial institution that has provided a customer with a notice described in subparagraph (A) to furnish negative information about the customer to a consumer reporting agency.

6.    (F)  Safe harbor. A financial institution shall not be liable for failure to perform the duties required by this paragraph if, at the time of the failure, the financial institution maintained reasonable policies and procedures to comply with this paragraph or the financial institution reasonably believed that the institution is prohibited, by law, from contacting the consumer.

7.    (G)  Definitions. For purposes of this paragraph, the following definitions shall apply:

1.    (i)  The term “negative information” means information concerning a customer’s delinquencies, late payments, insolvency, or any form of default.

2.    (ii)  The terms “customer” and “financial institution” have the same meanings as in section 509 Public Law 106-102.

(8) Ability of Consumer to Dispute Information Directly with Furnisher

See also 16 CFR Part 660.4 74 Fed. Reg. 31484 (07/01/09)

1.    (A)  In general. The Bureau, in consultation with the Federal Trade Commission, the Federal banking agencies, and the National Credit Union Administration, shall prescribe regulations that shall identify the circumstances under which a furnisher shall be required to reinvestigate a dispute concerning the accuracy of information contained in a consumer report on the consumer, based on a direct request of a consumer.

2.    (B)  Considerations. In prescribing regulations under subparagraph (A), the agencies shall weigh –

1.     (i)  the benefits to consumers with the costs on furnishers and the credit reporting system;

2.    (ii)  the impact on the overall accuracy and integrity of consumer reports of any such requirements;

3.    (iii)  whether direct contact by the consumer with the furnisher would likely result in the most expeditious resolution of any such dispute; and

4.    (iv)  the potential impact on the credit reporting process if credit repair organizations, as defined in section 403(3) [15 U.S.C. §1679a(3)], including entities that would be a credit repair organization, but for section 403(3)(B)(i), are able to circumvent the prohibition in subparagraph (G).

(C) Applicability. Subparagraphs (D) through (G) shall apply in any circumstance identified under the regulations promulgated under subparagraph (A).

4.    (D)  Submitting a notice of dispute. A consumer who seeks to dispute the accuracy of information shall provide a dispute notice directly to such person at the address specified by the person for such notices that –

1.    (i)  identifies the specific information that is being disputed;

2.    (ii)  explains the basis for the dispute; and

3.    (iii)  includes all supporting documentation required by the furnisher to substantiate the basis of the dispute.

5.    (E)  Duty of person after receiving notice of dispute. After receiving a notice of dispute from a consumer pursuant to subparagraph (D), the person that provided the information in dispute to a consumer reporting agency shall –

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

2.    (ii)  review all relevant information provided by the consumer with the notice;

3.    (iii)  complete such person’s investigation of the dispute and re- port the results of the investigation to the consumer before the expiration of the period under section 611(a)(1) within which a consumer reporting agency would be required to complete its action if the consumer had elected to dispute the information under that section; and (iv) if the investigation finds that the information reported was inaccurate, promptly notify each consumer reporting agency to which the person furnished the inaccurate information of that determination and provide to the agency any correction to that information that is necessary to make the information provided by the person accurate.

6.    (F)  Frivolous or Irrelevant Dispute

1.    (i)  In general. This paragraph shall not apply if the person receiving a notice of a dispute from a consumer reasonably determines that the dispute is frivolous or irrelevant, including –

1.    (I)  by reason of the failure of a consumer to provide sufficient information to investigate the disputed information; or

2.    (II)  the submission by a consumer of a dispute that is substantially the same as a dispute previously sub- mitted by or for the consumer, either directly to the person or through a consumer reporting agency under subsection (b), with respect to which the person has already performed the person’s duties under this paragraph or subsection (b), as applicable.

2.    (ii)  Notice of determination. Upon making any determination under clause (i) that a dispute is frivolous or irrelevant, the person shall notify the consumer of such determination not later than 5 business days after making such determi- nation, by mail or, if authorized by the consumer for that purpose, by any other means available to the person.

(iii) Contents of notice. A notice under clause (ii) shall include--

3.    (I)  the reasons for the determination under clause (i); and

4.    (II)  identification of any information required to investi- gate the disputed information, which may consist of a standardized form describing the general nature of such information.

7.    (G)  Exclusion of credit repair organizations. This paragraph shall not apply if the notice of the dispute is submitted by, is pre- pared on behalf of the consumer by, or is submitted on a form supplied to the consumer by, a credit repair organization, as defined in section 403(3), or an entity that would be a credit repair organization, but for section 403(3)(B)(i).

(9) Duty to provide notice of status as medical information furnisher. A person whose primary business is providing medical services, prod- ucts, or devices, or the person’s agent or assignee, who furnishes information to a consumer reporting agency on a consumer shall be considered a medical information furnisher for purposes of this title, and shall notify the agency of such status.

(b) Duties of Furnishers of Information upon Notice of Dispute

(1) In general. After receiving notice pursuant to section 611(a)(2) [§ 1681i] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall

1.    (A)  conduct an investigation with respect to the disputed information;

2.    (B)  review all relevant information provided by the consumer re- porting agency pursuant to section 611(a)(2) [§ 1681i];

3.    (C)  report the results of the investigation to the consumer reporting agency;

4.    (D)  if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and

5.    (E)  if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1), for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly–

1.    (i)  modify that item of information;

2.    (ii)  delete that item of information; or

3.    (iii)  permanently block the reporting of that item of information.

(2) Deadline. A person shall complete all investigations, reviews, and reports required under paragraph (1) regarding information provided by the person to a consumer reporting agency, before the expiration of the period under section 611(a)(1) [§ 1681i] within which the

consumer reporting agency is required to complete actions required by that section regarding that information.

(c) Limitation on liability. Except as provided in section 621(c)(1)(B), sections 616 and 617 do not apply to any violation of –

1.    (1)  subsection (a) of this section, including any regulations issued thereunder;

2.    (2)  subsection (e) of this section, except that nothing in this paragraph shall limit, expand, or otherwise affect liability under section 616 or 617, as applicable, for violations of subsection (b) of this section; or

3.    (3)  subsection (e) of section 615.

4.    (d)  Limitation on enforcement. The provisions of law described in paragraphs (1) through (3) of subsection (c) (other than with respect to the exception described in paragraph (2) of subsection (c)) shall be enforced exclusively as provided under section 621 by the Federal agencies and officials and the State officials identified in section 621.

5.    (e)  Accuracy Guidelines and Regulations Required

See also 16 CFR Part 660 74 Fed. Reg. 31484 (07/01/09)

1.    (1)  Guidelines. The Bureau shall, with respect to persons or entities that are subject to the enforcement authority of the Bureau under section 621 –

1.    (A)  establish and maintain guidelines for use by each person that furnishes information to a consumer reporting agency regarding the accuracy and integrity of the information relating to consumers that such entities furnish to consumer reporting agencies, and update such guidelines as often as necessary; and

2.    (B)  prescribe regulations requiring each person that furnishes infor- mation to a consumer reporting agency to establish reasonable policies and procedures for implementing the guidelines established pursuant to subparagraph (A).

2.    (2)  Criteria. In developing the guidelines required by paragraph (1)(A), the Bureau shall –

(A) identify patterns, practices, and specific forms of activity that can compromise the accuracy and integrity of information furnished to consumer reporting agencies;

§ 624.

2.    (B)  review the methods (including technological means) used to furnish information relating to consumers to consumer reporting agencies;

3.    (C)  determine whether persons that furnish information to consumer reporting agencies maintain and enforce policies to ensure the accuracy and integrity of information furnished to consumer reporting agencies; and

4.    (D)  examine the policies and processes that persons that furnish information to consumer reporting agencies employ to conduct re investigations and correct inaccurate information relating to consumers that has been furnished to consumer reporting agen- cies.

See also 16 CFR Parts 680, 698 Appx C 74 Fed. Reg. 22639-40 (05/14/09) 72 Fed. Reg. 61455-64 (10/30/07)

Affiliate sharing [15 U.S.C. § 1681s-3]

(a) Special Rule for Solicitation for Purposes of Marketing

(1) Notice. 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, but for clauses (i), (ii), and (iii) of section 603(d)(2)(A), may not use the information to make a solicitation for marketing purposes to a consumer about its products or services, unless--

1.    (A)  it is clearly and conspicuously disclosed to the consumer that the information may be communicated among such persons for purposes of making such solicitations to the consumer; and

2.    (B)  the consumer is provided an opportunity and a simple method to prohibit the making of such solicitations to the consumer by such person.

(2) Consumer Choice

(A) In general. The notice required under paragraph (1) shall al- low the consumer the opportunity to prohibit all solicitations referred to in such paragraph, and may allow the consumer to choose from different options when electing to prohibit the sending of such solicitations, including options regarding the types of entities and information covered, and which methods of delivering solicitations the consumer elects to prohibit.

(B) Format. Notwithstanding subparagraph (A), the notice required under paragraph (1) shall be clear, conspicuous, and concise, and any method provided under paragraph (1)(B) shall be simple. The regulations prescribed to implement this section shall provide specific guidance regarding how to comply with such standards.

(3) Duration

1.    (A)  In general. The election of a consumer pursuant to paragraph (1)(B) to prohibit the making of solicitations shall be effective for at least 5 years, beginning on the date on which the person receives the election of the consumer, unless the consumer requests that such election be revoked.

2.    (B)  Notice upon expiration of effective period. At such time as the election of a consumer pursuant to paragraph (1)(B) is no longer effective, a person may not use information that the person receives in the manner described in para-graph (1) to make any solicitation for marketing purposes to the consumer, unless the consumer receives a notice and an opportunity, using a simple method, to extend the opt-out for another period of at least 5 years, pursuant to the procedures described in paragraph (1).

(4) Scope. This section shall not apply to a person –

1.    (A)  using information to make a solicitation for marketing purposes to a consumer with whom the person has a pre-existing business relationship;

2.    (B)  using information to facilitate communications to an individual for whose benefit the person provides employee benefit or other services pursuant to a contract with an employer related to and arising out of the current employment relationship or status of the individual as a participant or beneficiary of an employee benefit plan;

3.    (C)  using information to perform services on behalf of another person related by common ownership or affiliated by corporate control, except that this subparagraph shall not be construed as permitting a person to send solicitations on behalf of another person, if such other person would not be permitted to send the solicitation on its own behalf as a result of the election of the consumer to prohibit solicitations under paragraph (1)(B);

4.    (D)  using information in response to a communication initiated by the consumer;

5.     (E)  using information in response to solicitations authorized or requested by the consumer; or

6.    (F)  if compliance with this section by that person would prevent compliance by that person with any provision of State insurance laws pertaining to unfair discrimination in any State in which the person is lawfully doing business.

(5) No retroactivity. This subsection shall not prohibit the use of information to send a solicitation to a consumer if such information was received prior to the date on which persons are required to comply with regulations implementing this subsection.

2.    (b)  Notice for other purposes permissible. A notice or other disclosure under this section may be coordinated and consolidated with any other notice required to be issued under any other provision of law by a person that is subject to this section, and a notice or other disclosure that is equivalent to the notice required by subsection (a), and that is provided by a person de- scribed in subsection (a) to a consumer together with disclosures required by any other provision of law, shall satisfy the requirements of subsection (a).

3.    (c)  User requirements. Requirements with respect to the use by a person of information received from another person related to it by common owner- ship or affiliated by corporate control, such as the requirements of this section, constitute requirements with respect to the exchange of information among persons affiliated by common ownership or common corporate control, within the meaning of section 625(b)(2).

4.    (d)  Definitions. For purposes of this section, the following definitions shall apply:

(1) The term “pre-existing business relationship” means a relationship between a person, or a person’s licensed agent, and a consumer, based on–

1.    (A)  a financial contract between a person and a consumer which is in force;

2.    (B)  the purchase, rental, or lease by the consumer of that person’s goods or services, or a financial transaction (including hold- ing an active account or a policy in force or having another continuing relationship) between the consumer and that person during the 18-month period immediately preceding the date on which the consumer is sent a solicitation covered by this section; (2)

§ 625.

(C) an inquiry or application by the consumer regarding a product or service offered by that person, during the 3-month period immediately preceding the date on which the consumer is sent a solicitation covered by this section; or

(D) any other pre-existing customer relationship defined in the regulations implementing this section.

The term “solicitation” means the marketing of a product or service initiated by a person to a particular consumer that is based on an exchange of information described in subsection (a), and is intended to encourage the consumer to purchase such product or service, but does not include communications that are directed at the general pub- lic or determined not to be a solicitation by the regulations prescribed under this section.

Relation to State laws [15 U.S.C. § 1681t]

1.    (a)  In general. Except as provided in subsections (b) and (c), this title does not annul, alter, affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency.

2.    (b)  General exceptions. No requirement or prohibition may be imposed under the laws of any State

(1) with respect to any subject matter regulated under

1.    (A)  subsection (c) or (e) of section 604 [§ 1681b], relating to the prescreening of consumer reports;

2.    (B)  section 611 [§ 1681i], relating to the time by which a consumer reporting agency must take any action, including the provision of notification to a consumer or other person, in any procedure related to the disputed accuracy of information in a consumer’s file, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996;

3.    (C)  subsections (a) and (b) of section 615 [§ 1681m], relating to the duties of a person who takes any adverse action with respect to a consumer;

4.    (D)  section 615(d) [§ 1681m], relating to the duties of persons who use a consumer report of a consumer in connection with any credit or insurance transaction that is not initiated by the consumer and that consists of a firm offer of credit or insurance;

5.    (E)  section 605 [§ 1681c], relating to information contained in consumer reports, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996;

6.    (F)  section 623 [§ 1681s-2], relating to the responsibilities of per- sons who furnish information to consumer reporting agencies, except that this paragraph shall not apply

1.    (i)  with respect to section 54A(a) of chapter 93 of the Mas- sachusetts Annotated Laws (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996); or

2.    (ii)  with respect to section 1785.25(a) of the California Civil Code (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996);

7.    (G)  section 609(e), relating to information available to victims under section 609(e);

8.    (H)  section 624, relating to the exchange and use of information to make a solicitation for marketing purposes; or

9.    (I)  section 615(h), relating to the duties of users of consumer reports to provide notice with respect to terms in certain credit transactions;

10.(2)  with respect to the exchange of information among persons affiliated by common ownership or common corporate control, except that this paragraph shall not apply with respect to subsection (a) or (c)(1) of section 2480e of title 9, Vermont Statutes Annotated (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996);

11.(3)  with respect to the disclosures required to be made under subsection (c), (d), (e), or (g) of section 609, or subsection (f) of section 609 relating to the disclosure of credit scores for credit granting purposes, except that this paragraph –

(A) shall not apply with respect to sections 1785.10, 1785.16, and 1785.20.2 of the California Civil Code (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003) and section 1785.15 through section 1785.15.2 of such Code (as in effect on such date);

2.    (B)  shall not apply with respect to sections 5-3-106(2) and 212- 14.3-104.3 of the Colorado Revised Statutes (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003); and

3.    (C)  shall not be construed as limiting, annulling, affecting, or su- perseding any provision of the laws of any State regulating the use in an insurance activity, or regulating disclosures concern- ing such use, of a credit-based insurance score of a consumer by any person engaged in the business of insurance;

4.    (4)  with respect to the frequency of any disclosure under section 612(a), except that this paragraph shall not apply –

1.    (A)  with respect to section 12-14.3-105(1)(d) of the Colorado Re- vised Statutes (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003);

2.    (B)  with respect to section 10-1-393(29)(C) of the Georgia Code (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003);

3.    (C)  with respect to section 1316.2 of title 10 of the Maine Revised Statutes (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003);

4.    (D)  with respect to sections 14-1209(a)(1) and 14-1209(b)(1)(i) of the Commercial Law Article of the Code of Maryland (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003);

5.    (E)  with respect to section 59(d) and section 59(e) of chapter 93 of the General Laws of Massachusetts (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003);

6.    (F)  with respect to section 56:11-37.10(a)(1) of the New Jersey Re- vised Statutes (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003); or

7.    (G)  with respect to section 2480c(a)(1) of title 9 of the Vermont Statutes Annotated (as in effect on the date of enactment of the Fair and Accurate Credit Transactions Act of 2003); or

5.    (5)  with respect to the conduct required by the specific provisions of –

(A) section 605(g);

2.     (B)  section 605A;

3.    (C)  section 605B;

4.    (D)  section 609(a)(1)(A);

5.    (E)  section 612(a);

6.    (F)  subsections (e), (f), and (g) of section 615;

7.    (G)  section 621(f);

8.    (H)  section 623(a)(6); or

9.    (I)  section 628.

(c) Definition of firm offer of credit or insurance. Notwithstanding any definition of the term “firm offer of credit or insurance” (or any equivalent term) under the laws of any State, the definition of that term contained in section 603(l) [§ 1681a] shall be construed to apply in the enforcement and interpretation of the laws of any State governing consumer reports.

(d) Limitations. Subsections (b) and (c) do not affect any settlement, agreement, or consent judgment between any State Attorney General and any consumer reporting agency in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996.

§ 626. Disclosures to FBI for counterintelligence purposes [15 U.S.C. § 1681u]

(a) Identity of financial institutions. Notwithstanding section 604 [§ 1681b] or any other provision of this title, a consumer reporting agency shall fur- nish to the Federal Bureau of Investigation the names and addresses of all financial institutions (as that term is defined in section 1101 of the Right to Financial Privacy Act of 1978 [12 U.S.C. § 3401]) at which a consumer maintains or has maintained an account, to the extent that information is in the files of the agency, when presented with a written request for that in- formation that includes a term that specifically identifies a consumer or ac- count to be used as the basis for the production of that information, signed by the Director of the Federal Bureau of Investigation, or the Director’s designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge of a Bureau field office designated by the Director, which certifies compliance with this section. The Director or the Director’s designee may make such a certification only

if the Director or the Director’s designee has determined in writing, that such information is sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amend- ment to the Constitution of the United States.

2.    (b)  Identifying information. Notwithstanding the provisions of section 604
[§ 1681b] or any other provision of this title, a consumer reporting agency shall furnish identifying information respecting a consumer, limited to name, address, former addresses, places of employment, or former places of employment, to the Federal Bureau of Investigation when presented with a written request that includes a term that specifically identifies a consumer or account to be used as the basis for the production of that information, signed by the Director or the Director’s designee, which certifies compliance with this subsection. The Director or the Director’s designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge of a Bureau field office designated by the Director may make such a certification only if the Director or the Director’s designee has determined in writing that such information is sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States.

3.    (c)  Court order for disclosure of consumer reports. Notwithstanding section 604 [§ 1681b] or any other provision of this title, if requested in writing by the Director of the Federal Bureau of Investigation, or a designee of the Director in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge of a Bureau field office designated by the Director, a court may issue an order exparte, which shall include a term that specifically identifies a consumer or account to be used as the basis for the production of the information, directing a consumer reporting agency to furnish a consumer report to the Federal Bureau of Investigation, upon a showing in camera that the consumer report is sought for the conduct of an authorized investigation to protect against international terrorism or clandestine intelligence activities, provided that such an investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution of the United States. The terms of an order issued under this subsection shall not disclose that the order is issued for purposes of a counterintelligence investigation.

(d) Confidentiality
(1) If the Director of the Federal Bureau of Investigation, or his designee in a position not lower than Deputy Assistant Director at Bureau headquarters or a Special Agent in Charge in a Bureau field office designated by the Director, certifies that otherwise there may result a danger to the national security of the United States, interference with a criminal, counterterrorism, or counterintelligence investigation, interference with diplomatic relations, or danger to the life or physical safety of any person, no consumer reporting agency or officer, employee, or agent of a consumer reporting agency shall disclose to any person (other than those to whom such disclosure is necessary

to comply with the request or an attorney to obtain legal advice or legal assistance with respect to the request) that the Federal Bureau of Investigation has sought or obtained the identity of financial institutions or a consumer report respecting any consumer under subsection (a), (b), or (c) of this section, and no consumer reporting agency or officer, employee, or agent of a consumer reporting agency shall include in any consumer report any information that would indicate that the Federal Bureau of Investigation has sought or obtained such information on a consumer report.

2.    (2)  The request shall notify the person or entity to whom the request is directed of the nondisclosure requirement under paragraph (1).

3.    (3)  Any recipient disclosing to those persons necessary to comply with the request or to an attorney to obtain legal advice or legal assistance with respect to the request shall inform such persons of any applicable nondisclosure requirement. Any person who receives a disclosure under this subsection shall be subject to the same prohibitions on disclosure under paragraph (1).

4.    (4)  At the request of the Director of the Federal Bureau of Investigation or the designee of the Director, any person making or intending to make a disclosure under this section shall identify to the Director or such designee the person to whom such disclosure will be made or to whom such disclosure was made prior to the request, except that nothing in this section shall require a person to inform the Director or such designee of the identity of an attorney to whom disclosure was made or will be made to obtain legal advice or legal assistance with respect to the request for the identity of financial institutions or a consumer report respecting any consumer under this section.

(e) Payment of fees. The Federal Bureau of Investigation shall, subject to
the availability of appropriations, pay to the consumer reporting agency assembling or providing report or information in accordance with procedures established under this section a fee for reimbursement for such costs as are reasonably necessary and which have been directly incurred in searching, reproducing, or transporting books, papers, records, or other data required or requested to be produced under this section.

6.    (f)  Limit on dissemination. The Federal Bureau of Investigation may not disseminate information obtained pursuant to this section outside of the Federal Bureau of Investigation, except to other Federal agencies as may be necessary for the approval or conduct of a foreign counterintelligence investigation, or, where the information concerns a person subject to the Uniform Code of Military Justice, to appropriate investigative authorities within the military department concerned as may be necessary for the conduct of a joint foreign counterintelligence investigation.

7.    (g)  Rules of construction. Nothing in this section shall be construed to pro- hibit information from being furnished by the Federal Bureau of Investiga- tion pursuant to a subpoena or court order, in connection with a judicial or administrative proceeding to enforce the provisions of this Act. Nothing in this section shall be construed to authorize or permit the withholding of information from the Congress.

8.    (h)  Reports to Congress

1.    (1)  On a semiannual basis, the Attorney General shall fully inform the Permanent Select Committee on Intelligence and the Committee on Banking, Finance and Urban Affairs of the House of Representatives, and the Select Committee on Intelligence and the Committee
on Banking, Housing, and Urban Affairs of the Senate concerning all requests made pursuant to subsections (a), (b), and (c) of this section.

2.    (2)  In the case of the semiannual reports required to be submitted under paragraph (1) to the Permanent Select Committee on Intelligence
of the House of Representatives and the Select Committee on Intelligence of the Senate, the submittal dates for such reports shall be as provided in section 415b of Title 50.

9.    (i)  Damages. Any agency or department of the United States obtaining or disclosing any consumer reports, records, or information contained therein in violation of this section is liable to the consumer to whom such consumer reports, records, or information relate in an amount equal to the sum of

1.    (1)  $100, without regard to the volume of consumer reports, records, or information involved;

2.    (2)  any actual damages sustained by the consumer as a result of the dis- closure;

3.    (3)  if the violation is found to have been willful or intentional, such punitive damages as a court may allow; and

 (4) in the case of any successful action to enforce liability under this subsection, the costs of the action, together with reasonable attorney fees, as determined by the court.

10.(j)  Disciplinary actions for violations. If a court determines that any agency or department of the United States has violated any provision of this section and the court finds that the circumstances surrounding the violation raise questions of whether or not an officer or employee of the agency or department acted willfully or intentionally with respect to the violation, the agency or department shall promptly initiate a proceeding to determine whether or not disciplinary action is warranted against the officer or employee who was responsible for the violation.

11.(k)  Good-faith exception. Notwithstanding any other provision of this title, any consumer reporting agency or agent or employee thereof making disclosure of consumer reports or identifying information pursuant to this subsection in good-faith reliance upon a certification of the Federal Bureau of Investigation pursuant to provisions of this section shall not be liable

to any person for such disclosure under this title, the constitution of any State, or any law or regulation of any State or any political subdivision of any State.

12.(l)  Limitation of remedies. Notwithstanding any other provision of this title, the remedies and sanctions set forth in this section shall be the only judicial remedies and sanctions for violation of this section.

(m) Injunctive relief. In addition to any other remedy contained in this section, injunctive relief shall be available to require compliance with the procedures of this section. In the event of any successful action under this subsection, costs together with reasonable attorney fees, as determined by the court, may be recovered.

§ 627. Disclosures to governmental agencies for counterterrorism purposes [15 U.S.C. § 1681v]

(a) Disclosure. Notwithstanding section 604 or any other provision of this title, a consumer reporting agency shall furnish a consumer report of a consumer and all other information in a consumer’s file to a government agency authorized to conduct investigations of, or intelligence or counter- intelligence activities or analysis related to, international terrorism when presented with a written certification by such government agency that such information is necessary for the agency’s conduct or such investigation, activity or analysis and that includes a term that specifically identifies a consumer or account to be used as the basis for the production of such information.

2.     (b)  Form of certification. The certification described in subsection (a) shall be signed by a supervisory official designated by the head of a Federal agency or an officer of a Federal agency whose appointment to office is required to be made by the President, by and with the advice and consent of the Senate.

3.    (c)  Confidentiality. No consumer reporting agency, or officer, employee, or agent of such consumer reporting agency, shall disclose to any person, or specify in any consumer report, that a government agency has sought or obtained access to information under subsection (a).

4.    (d)  Rule of construction. Nothing in section 626 shall be construed to limit the authority of the Director of the Federal Bureau of Investigation under this section.

5.    (e)  Safe harbor. Notwithstanding any other provision of this title, any consumer reporting agency or agent or employee thereof making disclo- sure of consumer reports or other information pursuant to this section in good-faith reliance upon a certification of a government agency pursuant to the provisions of this section shall not be liable to any person for such disclosure under this subchapter, the constitution of any State, or any law or regulation of any State or any political subdivision of any State.

(f) Reports to Congress

§ 628.

On a semi-annual basis, the Attorney General shall fully inform the Committee on the Judiciary, the Committee on Financial Services, and the Permanent Select Committee on Intelligence of the House of Representatives and the Committee on the Judiciary, the Committee on Banking, Housing, and Urban Affairs, and the Select Committee on Intelligence of the Senate concerning all requests made pursuant to subsection (a) of this section.

In the case of the semiannual reports required to be submitted under paragraph (1) to the Permanent Select Committee on Intelligence
of the House of Representatives and the Select Committee on Intelligence of the Senate, the submittal dates for such reports shall be as provided in section 415b of Title 50.

Disposal of records [15 U.S.C. § 1681w]

See also 16 CFR Part 682 69 Fed. Reg. 68690 (11/24/04)

(a) Regulations

(1) In general. The Federal Trade Commission, the Securities and Ex- change Commission, the Commodity Futures Trading Commission, (1) (2) § 629. to require a person to maintain or destroy any record pertaining to a consumer that is not imposed under other law; or

to alter or affect any requirement imposed under any other provision of law to maintain or destroy such a record.

Corporate and technological circumvention prohibited [15 U.S.C. § 1681x]

The Bureau shall prescribe regulations, to become effective not later than 90 days after the date of enactment of this section, to prevent a consumer reporting agency from circumventing or evading treatment as a consumer reporting agency described in section 603(p) for purposes of this title, including--

(1) by means of a corporate reorganization or restructuring, including a merger, acquisition, dissolution, divestiture, or asset sale of a consumer reporting agency; or § 629 - 15 U.S.C. §1681x

the Federal banking agencies, and the National Credit Union Administration, with respect to the entities that are subject to their respective enforcement authority under section 621, and in coordination as described in paragraph (2), shall issue final regulations requiring any person that maintains or otherwise possesses consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose to properly dispose of any such information or compilation.

2.    (2)  Coordination. Each agency required to prescribe regulations under paragraph (1) shall –

1.    (A)  consult and coordinate with each other such agency so that, to the extent possible, the regulations prescribed by each such agency are consistent and comparable with the regulations by each such other agency; and

2.    (B)  ensure that such regulations are consistent with the require- ments and regulations issued pursuant to Public Law 106-102 and other provisions of Federal law.

3.    (3)  Exemption authority. In issuing regulations under this section, the agencies identified in paragraph (1) may exempt any person or class of persons from application of those regulations, as such agency deems appropriate to carry out the purpose of this section.

(b) Rule of construction. Nothing in this section shall be construed –

§ 629 - 15 U.S.C. §1681x

(2) by maintaining or merging public record and credit account information in a manner that is substantially equivalent to that described in paragraphs (1) and (2) of section 603(p), in the manner described in section 603(p).

See also 16 CFR Part 611 69 Fed. Reg. 8531 (02/24/04) 69 Fed. Reg. 29061 (05/20/04)

Legislative History

House Report: No. 91-975 (Comm. on Banking and Currency) Senate Report: No. 91-1139 (Comm. on Banking and Currency) Conference Report: No. 91-1587
Enactment: Public Law No. 91-508 (October 26, 1970)

Amendments: Public Law Nos. 95-473 (October 17, 1978) 95-598 (November 6, 1978)

98-443 (October 4, 1984) 101-73 (August 9, 1989) 102-242 (December 19, 1991) 102-537 (October 27, 1992) 102-550 (October 28, 1992) 103-325 (September 23, 1994) 104-88 (December 29, 1995) 104-93 (January 6, 1996) 104-193 (August 22, 1996) 104-208 (September 30, 1996) 105-107 (November 20, 1997) 105-347 (November 2, 1998) 106-102 (November 12, 1999) 107-56 (October 26, 2001) 108-159 (December 4, 2003) 109-351 (October 13, 2006) 110-161 (December 27, 2007) 110-241 (June 3, 2008) 111-24 (May 22, 2009) 107-306 (November 27, 2002) 108-177 (Dec. 13, 2003) 108-458 (December 17, 2004) 109-177 (March 9, 2006) 109-178 (March 9, 2006) 111-319 (January 5, 2010) 111-203 (July 21, 2010) 114-94 (December 4, 2015) 114-23 (June 2, 2015)

The Fair Credit Reporting Act

<small>As a public service, the staff of the Federal Trade Commission (FTC) has prepared the following complete text of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. Although staff generally followed the format of the U.S. Code as published by the Government Printing Office, the format of this text does differ in minor ways from the Code (and from West's U.S. Code Annotated). For example, this version uses FCRA section numbers (§§ 601-625) in the headings. (The relevant U.S. Code citation is included with each section heading and each reference to the FCRA in the text.) </small>

<small>This version of the FCRA is complete as of July 1999.  It includes the amendments to the FCRA set forth in the Consumer Credit Reporting Reform Act of 1996 (Public Law 104-208, the Omnibus Consolidated Appropriations Act for Fiscal Year 1997, Title II, Subtitle D, Chapter 1), Section 311 of the Intelligence Authorization for Fiscal Year 1998 (Public Law 105-107), and the Consumer Reporting Employment Clarification Act of 1998 (Public Law 105-347).</small>

Table of Contents

<small>§ 601 Short title
§ 602 Congressional findings and statement of purpose
§ 603 Definitions; rules of construction
§ 604 Permissible purposes of consumer reports
§ 605 Requirements relating to information contained in consumer reports
§ 606 Disclosure of investigative consumer reports
§ 607 Compliance procedures
§ 608 Disclosures to governmental agencies
§ 609 Disclosures to consumers
§ 610 Conditions and form of disclosure to consumers
§ 611 Procedure in case of disputed accuracy
§ 612 Charges for certain disclosures
§ 613 Public record information for employment purposes
§ 614 Restrictions on investigative consumer reports
§ 615 Requirements on users of consumer reports
§ 616 Civil liability for willful noncompliance
§ 617 Civil liability for negligent noncompliance
§ 618 Jurisdiction of courts; limitation of actions
§ 619 Obtaining information under false pretenses
§ 620 Unauthorized disclosures by officers or employees
§ 621 Administrative enforcement
§ 622 Information on overdue child support obligations
§ 623 Responsibilities of furnishers of information to consumer reporting agencies
§ 624 Relation to State laws
§ 625 Disclosures to FBI for counterintelligence purposes</small>

§  601. Short title

This title may be cited as the Fair Credit Reporting Act.

§ 602. Congressional findings and statement of purpose <small>[15 U.S.C. § 1681]</small>

(a) Accuracy and fairness of credit reporting. The Congress makes the following findings:

(1) The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.

 (2) An elaborate mechanism has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers.

 (3) Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.

 (4) There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy.

(b) Reasonable procedures. It is the purpose of this title to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title.

§ 603. Definitions; rules of construction <small>[15 U.S.C. § 1681a]</small>

(a) Definitions and rules of construction set forth in this section are applicable for the purposes of this title.

(b) The term "person" means any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.

(c) The term "consumer" means an individual.

(d) Consumer report.

(1) In general. The term "consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for

 (A) credit or insurance to be used primarily for personal, family, or household purposes;

(B) employment purposes; or

(C) any other purpose authorized under section 604 [§ 1681b].

(2) Exclusions. The term "consumer report" does not include

 (A) any

(i) report containing information solely as to transactions or experiences between the consumer and the person making the report;

(ii) communication of that information among persons related by common ownership or affiliated by corporate control; or

(iii) communication of other information among persons related by common ownership or affiliated by corporate control, if it is clearly and conspicuously disclosed to the consumer that the information may be communicated among such persons and the consumer is given the opportunity, before the time that the information is initially communicated, to direct that such information not be communicated among such persons;

(B) any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device;

(C) any report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys his or her decision with respect to such request, if the third party advises the consumer of the name and address of the person to whom the request was made, and such person makes the disclosures to the consumer required under section 615 [§ 1681m]; or

(D) a communication described in subsection (o).

(e) The term "investigative consumer report" means a consumer report or portion thereof in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information. However, such information shall not include specific factual information on a consumer's credit record obtained directly from a creditor of the consumer or from a consumer reporting agency when such information was obtained directly from a creditor of the consumer or from the consumer.

(f) The term "consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.

(g) The term "file," when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.

(h) The term "employment purposes" when used in connection with a consumer report means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment or retention as an employee.

(i) The term "medical information" means information or records obtained, with the consent of the individual to whom it relates, from licensed physicians or medical practitioners, hospitals, clinics, or other medical or medically related facilities.

(j) Definitions relating to child support obligations.

(1) Overdue support. The term "overdue support" has the meaning given to such term in section 666(e) of title 42 [Social Security Act, 42 U.S.C. § 666(e)].

 (2) State or local child support enforcement agency. The term "State or local child support enforcement agency" means a State or local agency which administers a State or local program for establishing and enforcing child support obligations.

(k) Adverse action.

(1) Actions included. The term "adverse action"

 (A) has the same meaning as in section 701(d)(6) of the Equal Credit Opportunity Act; and

(B) means

(i) a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of insurance;

(ii) a denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee;

(iii) a denial or cancellation of, an increase in any charge for, or any other adverse or unfavorable change in the terms of, any license or benefit described in section 604(a)(3)(D) [§ 1681b]; and

(iv) an action taken or determination that is

(I) made in connection with an application that was made by, or a transaction that was initiated by, any consumer, or in connection with a review of an account under section 604(a)(3)(F)(ii)[§ 1681b]; and

(II) adverse to the interests of the consumer.

(2) Applicable findings, decisions, commentary, and orders. For purposes of any determination of whether an action is an adverse action under paragraph (1)(A), all appropriate final findings, decisions, commentary, and orders issued under section 701(d)(6) of the Equal Credit Opportunity Act by the Board of Governors of the Federal Reserve System or any court shall apply.

(l) Firm offer of credit or insurance. The term "firm offer of credit or insurance" means any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer, except that the offer may be further conditioned on one or more of the following:

(1) The consumer being determined, based on information in the consumer's application for the credit or insurance, to meet specific criteria bearing on credit worthiness or insurability, as applicable, that are established

 (A) before selection of the consumer for the offer; and

(B) for the purpose of determining whether to extend credit or insurance pursuant to the offer.

(2) Verification

 (A) that the consumer continues to meet the specific criteria used to select the consumer for the offer, by using information in a consumer report on the consumer, information in the consumer's application for the credit or insurance, or other information bearing on the credit worthiness or insurability of the consumer; or

(B) of the information in the consumer's application for the credit or insurance, to determine that the consumer meets the specific criteria bearing on credit worthiness or insurability.

(3) The consumer furnishing any collateral that is a requirement for the extension of the credit or insurance that was

 (A) established before selection of the consumer for the offer of credit or insurance; and

(B) disclosed to the consumer in the offer of credit or insurance.

(m) Credit or insurance transaction that is not initiated by the consumer. The term "credit or insurance transaction that is not initiated by the consumer" does not include the use of a consumer report by a person with which the consumer has an account or insurance policy, for purposes of

(1) reviewing the account or insurance policy; or

 (2) collecting the account.

(n) State. The term "State" means any State, the Commonwealth of Puerto Rico, the District of Columbia, and any territory or possession of the United States.

(o) Excluded communications. A communication is described in this subsection if it is a communication

(1) that, but for subsection (d)(2)(D), would be an investigative consumer report;

 (2) that is made to a prospective employer for the purpose of

 (A) procuring an employee for the employer; or

 (B) procuring an opportunity for a natural person to work for the employer;

 (3) that is made by a person who regularly performs such procurement;

 (4) that is not used by any person for any purpose other than a purpose described in subparagraph (A) or (B) of paragraph (2); and

 (5) with respect to which

 (A) the consumer who is the subject of the communication

 (i) consents orally or in writing to the nature and scope of the communication, before the collection of any information for the purpose of making the communication;

 (ii) consents orally or in writing to the making of the communication to a prospective employer, before the making of the communication; and

 (iii) in the case of consent under clause (i) or (ii) given orally, is provided written confirmation of that consent by the person making the communication, not later than 3 business days after the receipt of the consent by that person;

 (B) the person who makes the communication does not, for the purpose of making the communication, make any inquiry that if made by a prospective employer of the consumer who is the subject of the communication would violate any applicable Federal or State equal employment opportunity law or regulation; and

 (C) the person who makes the communication

 (i) discloses in writing to the consumer who is the subject of the communication, not later than 5 business days after receiving any request from the consumer for such disclosure, the nature and substance of all information in the consumer's file at the time of the request, except that the sources of any information that is acquired solely for use in making the communication and is actually used for no other purpose, need not be disclosed other than under appropriate discovery procedures in any court of competent jurisdiction in which an action is brought; and

(ii) notifies the consumer who is the subject of the communication, in writing, of the consumer's right to request the information described in clause (i).

(p) Consumer reporting agency that compiles and maintains files on consumers on a nationwide basis. The term "consumer reporting agency that compiles and maintains files on consumers on a nationwide basis" means a consumer reporting agency that regularly engages in the practice of assembling or evaluating, and maintaining, for the purpose of furnishing consumer reports to third parties bearing on a consumer's credit worthiness, credit standing, or credit capacity, each of the following regarding consumers residing nationwide:

(1) Public record information.

 (2) Credit account information from persons who furnish that information regularly and in the ordinary course of business.

§ 604. Permissible purposes of consumer reports <small>[15 U.S.C. § 1681b]</small>

(a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

(1) In response to the order of a court having jurisdiction to issue such an order, or a subpoena issued in connection with proceedings before a Federal grand jury.

 (2) In accordance with the written instructions of the consumer to whom it relates.

 (3) To a person which it has reason to believe

 (A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or

 (B) intends to use the information for employment purposes; or

 (C) intends to use the information in connection with the underwriting of insurance involving the consumer; or

 (D) intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status; or

 (E) intends to use the information, as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or

 (F) otherwise has a legitimate business need for the information

 (i) in connection with a business transaction that is initiated by the consumer; or

 (ii) to review an account to determine whether the consumer continues to meet the terms of the account.

 (4) In response to a request by the head of a State or local child support enforcement agency (or a State or local government official authorized by the head of such an agency), if the person making the request certifies to the consumer reporting agency that

 (A) the consumer report is needed for the purpose of establishing an individual's capacity to make child support payments or determining the appropriate level of such payments;

 (B) the paternity of the consumer for the child to which the obligation relates has been established or acknowledged by the consumer in accordance with State laws under which the obligation arises (if required by those laws);

 (C) the person has provided at least 10 days' prior notice to the consumer whose report is requested, by certified or registered mail to the last known address of the consumer, that the report will be requested; and

 (D) the consumer report will be kept confidential, will be used solely for a purpose described in subparagraph (A), and will not be used in connection with any other civil, administrative, or criminal proceeding, or for any other purpose.

 (5) To an agency administering a State plan under Section 454 of the Social Security Act (42 U.S.C. § 654) for use to set an initial or modified child support award.

(b) Conditions for furnishing and using consumer reports for employment purposes.

(1) Certification from user. A consumer reporting agency may furnish a consumer report for employment purposes only if

 (A) the person who obtains such report from the agency certifies to the agency that

 (i) the person has complied with paragraph (2) with respect to the consumer report, and the person will comply with paragraph (3) with respect to the consumer report if paragraph (3) becomes applicable; and

(ii) information from the consumer report will not be used in violation of any applicable Federal or State equal employment opportunity law or regulation; and

(B) the consumer reporting agency provides with the report, or has previously provided, a summary of the consumer's rights under this title, as prescribed by the Federal Trade Commission under section 609(c)(3) [§ 1681g].

 (2) Disclosure to consumer.

 (A) In general. Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless--

 (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and

 (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

 (B) Application by mail, telephone, computer, or other similar means. If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, at any time before a consumer report is procured or caused to be procured in connection with that application--

 (i) the person who procures the consumer report on the consumer for employment purposes shall provide to the consumer, by oral, written, or electronic means, notice that a consumer report may be obtained for employment purposes, and a summary of the consumer's rights under section 615(a)(3); and

 (ii) the consumer shall have consented, orally, in writing, or electronically to the procurement of the report by that person.

 (C) Scope. Subparagraph (B) shall apply to a person procuring a consumer report on a consumer in connection with the consumer's application for employment only if--

 (i) the consumer is applying for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of title 49, or a position subject to safety regulation by a State transportation agency; and

 (ii) as of the time at which the person procures the report or causes the report to be procured the only interaction between the consumer and the person in connection with that employment application has been by mail, telephone, computer, or other similar means.

 (3) Conditions on use for adverse actions.

 (A) In general. Except as provided in subparagraph (B), in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates--

 (i) a copy of the report; and

 (ii) a description in writing of the rights of the consumer under this title, as prescribed by the Federal Trade Commission under section 609(c)(3).

 (B) Application by mail, telephone, computer, or other similar means.

 (i) If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, and if a person who has procured a consumer report on the consumer for employment purposes takes adverse action on the employment application based in whole or in part on the report, then the person must provide to the consumer to whom the report relates, in lieu of the notices required under subparagraph (A) of this section and under section 615(a), within 3 business days of taking such action, an oral, written or electronic notification--

(I) that adverse action has been taken based in whole or in part on a consumer report received from a consumer reporting agency;

(II) of the name, address and telephone number of the consumer reporting agency that furnished the consumer report (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis);

(III) that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide to the consumer the specific reasons why the adverse action was taken; and

(IV) that the consumer may, upon providing proper identification, request a free copy of a report and may dispute with the consumer reporting agency the accuracy or completeness of any information in a report.

(ii) If, under clause (B)(i)(IV), the consumer requests a copy of a consumer report from the person who procured the report, then, within 3 business days of receiving the consumer's request, together with proper identification, the person must send or provide to the consumer a copy of a report and a copy of the consumer's rights as prescribed by the Federal Trade Commission under section 609(c)(3).

(C) Scope. Subparagraph (B) shall apply to a person procuring a consumer report on a consumer in connection with the consumer's application for employment only if--

 (i) the consumer is applying for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of title 49, or a position subject to safety regulation by a State transportation agency; and

 (ii) as of the time at which the person procures the report or causes the report to be procured the only interaction between the consumer and the person in connection with that employment application has been by mail, telephone, computer, or other similar means.

 (4) Exception for national security investigations.

 (A) In general. In the case of an agency or department of the United States Government which seeks to obtain and use a consumer report for employment purposes, paragraph (3) shall not apply to any adverse action by such agency or department which is based in part on such consumer report, if the head of such agency or department makes a written finding that--

 (i) the consumer report is relevant to a national security investigation of such agency or department;

 (ii) the investigation is within the jurisdiction of such agency or department;

 (iii) there is reason to believe that compliance with paragraph (3) will--

 (I) endanger the life or physical safety of any person;

 (II) result in flight from prosecution;

 (III) result in the destruction of, or tampering with, evidence relevant to the investigation;

 (IV) result in the intimidation of a potential witness relevant to the investigation;

 (V) result in the compromise of classified information; or

 (VI) otherwise seriously jeopardize or unduly delay the investigation or another official proceeding.

 (B) Notification of consumer upon conclusion of investigation. Upon the conclusion of a national security investigation described in subparagraph (A), or upon the determination that the exception under subparagraph (A) is no longer required for the reasons set forth in such subparagraph, the official exercising the authority in such subparagraph shall provide to the consumer who is the subject of the consumer report with regard to which such finding was made--

 (i) a copy of such consumer report with any classified information redacted as necessary;

 (ii) notice of any adverse action which is based, in part, on the consumer report; and

 (iii) the identification with reasonable specificity of the nature of the investigation for which the consumer report was sought.

 (C) Delegation by head of agency or department. For purposes of subparagraphs (A) and (B), the head of any agency or department of the United States Government may delegate his or her authorities under this paragraph to an official of such agency or department who has personnel security responsibilities and is a member of the Senior Executive Service or equivalent civilian or military rank.

 (D) Report to the congress. Not later than January 31 of each year, the head of each agency and department of the United States Government that exercised authority under this paragraph during the preceding year shall submit a report to the Congress on the number of times the department or agency exercised such authority during the year.

 (E) Definitions. For purposes of this paragraph, the following definitions shall apply:

 (i) Classified information. The term `classified information' means information that is protected from unauthorized disclosure under Executive Order No. 12958 or successor orders.

 (ii) National security investigation. The term 'national security investigation' means any official inquiry by an agency or department of the United States Government to determine the eligibility of a consumer to receive access or continued access to classified information or to determine whether classified information has been lost or compromised.

(c) Furnishing reports in connection with credit or insurance transactions that are not initiated by the consumer.

(1) In general. A consumer reporting agency may furnish a consumer report relating to any consumer pursuant to subparagraph (A) or (C) of subsection (a)(3) in connection with any credit or insurance transaction that is not initiated by the consumer only if

 (A) the consumer authorizes the agency to provide such report to such person; or

 (B) (i) the transaction consists of a firm offer of credit or insurance;

 (ii) the consumer reporting agency has complied with subsection (e); and

 (iii) there is not in effect an election by the consumer, made in accordance with subsection (e), to have the consumer's name and address excluded from lists of names provided by the agency pursuant to this paragraph.

 (2) Limits on information received under paragraph (1)(B). A person may receive pursuant to paragraph (1)(B) only

 (A) the name and address of a consumer;

 (B) an identifier that is not unique to the consumer and that is used by the person solely for the purpose of verifying the identity of the consumer; and

 (C) other information pertaining to a consumer that does not identify the relationship or experience of the consumer with respect to a particular creditor or other entity.

 (3) Information regarding inquiries. Except as provided in section 609(a)(5) [§ 1681g], a consumer reporting agency shall not furnish to any person a record of inquiries in connection with a credit or insurance transaction that is not initiated by a consumer.

(d) Reserved.

(e) Election of consumer to be excluded from lists.

(1) In general. A consumer may elect to have the consumer's name and address excluded from any list provided by a consumer reporting agency under subsection (c)(1)(B) in connection with a credit or insurance transaction that is not initiated by the consumer, by notifying the agency in accordance with paragraph (2) that the consumer does not consent to any use of a consumer report relating to the consumer in connection with any credit or insurance transaction that is not initiated by the consumer.

 (2) Manner of notification. A consumer shall notify a consumer reporting agency under paragraph (1)

 (A) through the notification system maintained by the agency under paragraph (5); or

 (B) by submitting to the agency a signed notice of election form issued by the agency for purposes of this subparagraph.

 (3) Response of agency after notification through system. Upon receipt of notification of the election of a consumer under paragraph (1) through the notification system maintained by the agency under paragraph (5), a consumer reporting agency shall

 (A) inform the consumer that the election is effective only for the 2-year period following the election if the consumer does not submit to the agency a signed notice of election form issued by the agency for purposes of paragraph (2)(B); and

 (B) provide to the consumer a notice of election form, if requested by the consumer, not later than 5 business days after receipt of the notification of the election through the system established under paragraph (5), in the case of a request made at the time the consumer provides notification through the system.

 (4) Effectiveness of election. An election of a consumer under paragraph (1)

 (A) shall be effective with respect to a consumer reporting agency beginning 5 business days after the date on which the consumer notifies the agency in accordance with paragraph (2);

 (B) shall be effective with respect to a consumer reporting agency

 (i) subject to subparagraph (C), during the 2-year period beginning 5 business days after the date on which the consumer notifies the agency of the election, in the case of an election for which a consumer notifies the agency only in accordance with paragraph (2)(A); or

 (ii) until the consumer notifies the agency under subparagraph (C), in the case of an election for which a consumer notifies the agency in accordance with paragraph (2)(B);

 (C) shall not be effective after the date on which the consumer notifies the agency, through the notification system established by the agency under paragraph (5), that the election is no longer effective; and

 (D) shall be effective with respect to each affiliate of the agency.

 (5) Notification system.

 (A) In general. Each consumer reporting agency that, under subsection (c)(1)(B), furnishes a consumer report in connection with a credit or insurance transaction that is not initiated by a consumer, shall

 (i) establish and maintain a notification system, including a toll-free telephone number, which permits any consumer whose consumer report is maintained by the agency to notify the agency, with appropriate identification, of the consumer's election to have the consumer's name and address excluded from any such list of names and addresses provided by the agency for such a transaction; and

 (ii) publish by not later than 365 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996, and not less than annually thereafter, in a publication of general circulation in the area served by the agency

 (I) a notification that information in consumer files maintained by the agency may be used in connection with such transactions; and

 (II) the address and toll-free telephone number for consumers to use to notify the agency of the consumer's election under clause (I).

 (B) Establishment and maintenance as compliance. Establishment and maintenance of a notification system (including a toll-free telephone number) and publication by a consumer reporting agency on the agency's own behalf and on behalf of any of its affiliates in accordance with this paragraph is deemed to be compliance with this paragraph by each of those affiliates.

 (6) Notification system by agencies that operate nationwide. Each consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall establish and maintain a notification system for purposes of paragraph (5) jointly with other such consumer reporting agencies.

(f) Certain use or obtaining of information prohibited. A person shall not use or obtain a consumer report for any purpose unless

(1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and

 (2) the purpose is certified in accordance with section 607 [§ 1681e] by a prospective user of the report through a general or specific certification.

(g) Furnishing reports containing medical information. A consumer reporting agency shall not furnish for employment purposes, or in connection with a credit or insurance transaction, a consumer report that contains medical information about a consumer, unless the consumer consents to the furnishing of the report.

§ 605. Requirements relating to information contained in consumer reports <small>[15 U.S.C. § 1681c]</small>

(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.

 (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.

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

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

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

(b) Exempted cases. The provisions 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.

(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.

 (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.

(d) Information required to be disclosed. 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.

(e) Indication of closure of account by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(4) [§ 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.

(f) Indication of dispute by consumer. If a consumer reporting agency is notified pursuant to section 623(a)(3) [§ 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.

§ 606. Disclosure of investigative consumer reports<small> [15 U.S.C. § 1681d]</small>

(a) Disclosure of fact of preparation. A person may not procure or cause to be prepared an investigative consumer report on any consumer unless

(1) it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made, and such disclosure

 (A) is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and

 (B) includes a statement informing the consumer of his right to request the additional disclosures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 609(c) [§ 1681g]; and

 (2) the person certifies or has certified to the consumer reporting agency that

 (A) the person has made the disclosures to the consumer required by paragraph (1); and

 (B) the person will comply with subsection (b).

(b) Disclosure on request of nature and scope of investigation. Any person who procures or causes to be prepared an investigative consumer report on any consumer shall, upon written request made by the consumer within a reasonable period of time after the receipt by him of the disclosure required by subsection (a)(1) of this section, make a complete and accurate disclosure of the nature and scope of the investigation requested. This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later.

(c) Limitation on liability upon showing of reasonable procedures for compliance with provisions. No person may be held liable for any violation of subsection (a) or (b) of this section if he shows by a preponderance of the evidence that at the time of the violation he maintained reasonable procedures to assure compliance with subsection (a) or (b) of this section.

(d) Prohibitions.

(1) Certification. A consumer reporting agency shall not prepare or furnish investigative consumer report unless the agency has received a certification under subsection (a)(2) from the person who requested the report.

 (2) Inquiries. A consumer reporting agency shall not make an inquiry for the purpose of preparing an investigative consumer report on a consumer for employment purposes if the making of the inquiry by an employer or prospective employer of the consumer would violate any applicable Federal or State equal employment opportunity law or regulation.

 (3) Certain public record information. Except as otherwise provided in section 613 [§ 1681k], a consumer reporting agency shall not furnish an investigative consumer report that includes information that is a matter of public record and that relates to an arrest, indictment, conviction, civil judicial action, tax lien, or outstanding judgment, unless the agency has verified the accuracy of the information during the 30-day period ending on the date on which the report is furnished.

 (4) Certain adverse information. A consumer reporting agency shall not prepare or furnish an investigative consumer report on a consumer that contains information that is adverse to the interest of the consumer and that is obtained through a personal interview with a neighbor, friend, or associate of the consumer or with another person with whom the consumer is acquainted or who has knowledge of such item of information, unless

 (A) the agency has followed reasonable procedures to obtain confirmation of the information, from an additional source that has independent and direct knowledge of the information; or

 (B) the person interviewed is the best possible source of the information.

§ 607. Compliance procedures <small>[15 U.S.C. § 1681e]</small>

(a) Identity and purposes of credit users. Every consumer reporting agency shall maintain reasonable procedures designed to avoid violations of section 605 [§ 1681c] and to limit the furnishing of consumer reports to the purposes listed under section 604 [§ 1681b] of this title. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that the information will be used for no other purpose. Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by such prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report to any person if it has reasonable grounds for believing that the consumer report will not be used for a purpose listed in section 604 [§ 1681b] of this title.

(b) Accuracy of report. Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

(c) Disclosure of consumer reports by users allowed. A consumer reporting agency may not prohibit a user of a consumer report furnished by the agency on a consumer from disclosing the contents of the report to the consumer, if adverse action against the consumer has been taken by the user based in whole or in part on the report.

(d) Notice to users and furnishers of information.

(1) Notice requirement. A consumer reporting agency shall provide to any person

 (A) who regularly and in the ordinary course of business furnishes information to the agency with respect to any consumer; or

 (B) to whom a consumer report is provided by the agency;

 a notice of such person's responsibilities under this title.

 (2) Content of notice. The Federal Trade Commission shall prescribe the content of notices under paragraph (1), and a consumer reporting agency shall be in compliance with this subsection if it provides a notice under paragraph (1) that is substantially similar to the Federal Trade Commission prescription under this paragraph.

(e) Procurement of consumer report for resale.

(1) Disclosure. A person may not procure a consumer report for purposes of reselling the report (or any information in the report) unless the person discloses to the consumer reporting agency that originally furnishes the report

 (A) the identity of the end-user of the report (or information); and

 (B) each permissible purpose under section 604 [§ 1681b] for which the report is furnished to the end-user of the report (or information).

 (2) Responsibilities of procurers for resale. A person who procures a consumer report for purposes of reselling the report (or any information in the report) shall

 (A) establish and comply with reasonable procedures designed to ensure that the report (or information) is resold by the person only for a purpose for which the report may be furnished under section 604 [§ 1681b], including by requiring that each person to which the report (or information) is resold and that resells or provides the report (or information) to any other person

 (i) identifies each end user of the resold report (or information);

 (ii) certifies each purpose for which the report (or information) will be used; and

 (iii) certifies that the report (or information) will be used for no other purpose; and

 (B) before reselling the report, make reasonable efforts to verify the identifications and certifications made under subparagraph (A).

(3) Resale of consumer report to a federal agency or department. Notwithstanding paragraph (1) or (2), a person who procures a consumer report for  purposes of reselling the report (or any information in the report) shall not disclose the identity of the end-user of the report under paragraph (1) or (2) if --

(A) the end user is an agency or department of the United States Government which procures the report from the person for purposes of determining the eligibility of the consumer concerned to receive access or continued access to classified information (as defined in section 604(b)(4)(E)(i)); and

 (B) the agency or department certifies in writing to the person reselling the report that nondisclosure is necessary to protect classified information or the safety of persons employed by or contracting with, or undergoing investigation for work or contracting with the agency or department.

§ 608. Disclosures to governmental agencies <small>[15 U.S.C. § 1681f]</small>

Notwithstanding the provisions of section 604 [§ 1681b] of this title, a consumer reporting agency may furnish identifying information respecting any consumer, limited to his name, address, former addresses, places of employment, or former places of employment, to a governmental agency.

§ 609. Disclosures to consumers <small>[15 U.S.C. § 1681g]</small>

(a) Information on file; sources; report recipients. Every consumer reporting agency shall, upon request, and subject to 610(a)(1) [§ 1681h], clearly and accurately disclose to the consumer:

(1) All information in the consumer's file at the time of the request, except that nothing in this paragraph shall be construed to require a consumer reporting agency to disclose to a consumer any information concerning credit scores or any other risk scores or predictors relating to the consumer.

 (2) The sources of the information; except that the sources of information acquired solely for use in preparing an investigative consumer report and actually used for no other purpose need not be disclosed: Provided, That in the event an action is brought under this title, such sources shall be available to the plaintiff under appropriate discovery procedures in the court in which the action is brought.

 (3) (A) Identification of each person (including each end-user identified under section 607(e)(1) [§ 1681e]) that procured a consumer report

 (i) for employment purposes, during the 2-year period preceding the date on which the request is made; or

(ii) for any other purpose, during the 1-year period preceding the date on which the request is made.

(B) An identification of a person under subparagraph (A) shall include

 (i) the name of the person or, if applicable, the trade name (written in full) under which such person conducts business; and

 (ii) upon request of the consumer, the address and telephone number of the person.

 (C) Subparagraph (A) does not apply if--

 (i) the end user is an agency or department of the United States Government that procures the report from the person for purposes of determining the eligibility of the consumer to whom the report relates to receive access or continued access to classified information (as defined in section 604(b)(4)(E)(i)); and

 (ii) the head of the agency or department makes a written finding as prescribed under section 604(b)(4)(A).

(4) The dates, original payees, and amounts of any checks upon which is based any adverse characterization of the consumer, included in the file at the time of the disclosure.

 (5) A record of all inquiries received by the agency during the 1-year period preceding the request that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer.

(b) Exempt information. The requirements of subsection (a) of this section respecting the disclosure of sources of information and the recipients of consumer reports do not apply to information received or consumer reports furnished prior to the effective date of this title except to the extent that the matter involved is contained in the files of the consumer reporting agency on that date.

(c) Summary of rights required to be included with disclosure.

(1) Summary of rights. A consumer reporting agency shall provide to a consumer, with each written disclosure by the agency to the consumer under this section

 (A) a written summary of all of the rights that the consumer has under this title; and

 (B) in the case of a consumer reporting agency that compiles and maintains files on consumers on a nationwide basis, a toll-free telephone number established by the agency, at which personnel are accessible to consumers during normal business hours.

 (2) Specific items required to be included. The summary of rights required under paragraph (

1) shall include

(A) a brief description of this title and all rights of consumers under this title;

(B) an explanation of how the consumer may exercise the rights of the consumer under this title;

(C) a list of all Federal agencies responsible for enforcing any provision of this title and the address and any appropriate phone number of each such agency, in a form that will assist the consumer in selecting the appropriate agency;

(D) a statement that the consumer may have additional rights under State law and that the consumer may wish to contact a State or local consumer protection agency or a State attorney general to learn of those rights; and

(E) a statement that a consumer reporting agency is not required to remove accurate derogatory information from a consumer's file, unless the information is outdated under section 605 [§ 1681c] or cannot be verified.

(3) Form of summary of rights. For purposes of this subsection and any disclosure by a consumer reporting agency required under this title with respect to consumers' rights, the Federal Trade Commission (after consultation with each Federal agency referred to in section 621(b) [§ 1681s]) shall prescribe the form and content of any such disclosure of the rights of consumers required under this title. A consumer reporting agency shall be in compliance with this subsection if it provides disclosures under paragraph (1) that are substantially similar to the Federal Trade Commission prescription under this paragraph.

(4) Effectiveness. No disclosures shall be required under this subsection until the date on which the Federal Trade Commission prescribes the form and content of such disclosures under paragraph (3).

§ 610. Conditions and form of disclosure to consumers <small>[15 U.S.C. § 1681h]</small>

(a) In general.

(1) Proper identification. A consumer reporting agency shall require, as a condition of making the disclosures required under section 609 [§ 1681g], that the consumer furnish proper identification.

(2) Disclosure in writing. Except as provided in subsection (b), the disclosures required to be made under section 609 [§ 1681g] shall be provided under that section in writing.

(b) Other forms of disclosure.

(1) In general. If authorized by a consumer, a consumer reporting agency may make the disclosures required under 609 [§ 1681g]

(A) other than in writing; and

(B) in such form as may be

(i) specified by the consumer in accordance with paragraph (2); and

(ii) available from the agency.

(2) Form. A consumer may specify pursuant to paragraph (1) that disclosures under section 609 [§ 1681g] shall be made

(A) in person, upon the appearance of the consumer at the place of business of the consumer reporting agency where disclosures are regularly provided, during normal business hours, and on reasonable notice;

(B) by telephone, if the consumer has made a written request for disclosure by telephone;

(C) by electronic means, if available from the agency; or

(D) by any other reasonable means that is available from the agency.

(c) Trained personnel. Any consumer reporting agency shall provide trained personnel to explain to the consumer any information furnished to him pursuant to section 609 [§ 1681g] of this title.

(d) Persons accompanying consumer. The consumer shall be permitted to be accompanied by one other person of his choosing, who shall furnish reasonable identification. A consumer reporting agency may require the consumer to furnish a written statement granting permission to the consumer reporting agency to discuss the consumer's file in such person's presence.

(e) Limitation of liability. Except as provided in sections 616 and 617 [§§ 1681n and 1681o] of this title, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 609, 610, or 615 [§§ 1681g, 1681h, or 1681m] of this title or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report, except as to false information furnished with malice or willful intent to injure such consumer.

§ 611. Procedure in case of disputed accuracy [15 U.S.C. § 1681i]

(a) Reinvestigations of disputed information.

(1) Reinvestigation required.

(A) In general. If the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly of such dispute, the agency shall reinvestigate free of charge and record the current status of the disputed information, or delete the item from the file in accordance with paragraph (5), before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer.

 (B) Extension of period to reinvestigate. Except as provided in subparagraph (C), the 30-day period described in subparagraph (A) may be extended for not more than 15 additional days if the consumer reporting agency receives information from the consumer during that 30-day period that is relevant to the reinvestigation.

 (C) Limitations on extension of period to reinvestigate. Subparagraph (B) shall not apply to any reinvestigation in which, during the 30-day period described in subparagraph (A), the information that is the subject of the reinvestigation is found to be inaccurate or incomplete or the consumer reporting agency determines that the information cannot be verified.

 (2) Prompt notice of dispute to furnisher of information.

 (A) In general. Before the expiration of the 5-business-day period beginning on the date on which a consumer reporting agency receives notice of a dispute from any consumer in accordance with paragraph (1), the agency shall provide notification of the dispute to any person who provided any item of information in dispute, at the address and in the manner established with the person. The notice shall include all relevant information regarding the dispute that the agency has received from the consumer.

 (B) Provision of other information from consumer. The consumer reporting agency shall promptly provide to the person who provided the information in dispute all relevant information regarding the dispute that is received by the agency from the consumer after the period referred to in subparagraph (A) and before the end of the period referred to in paragraph (1)(A).

 (3) Determination that dispute is frivolous or irrelevant.

 (A) In general. Notwithstanding paragraph (1), a consumer reporting agency may terminate a reinvestigation of information disputed by a consumer under that paragraph if the agency reasonably determines that the dispute by the consumer is frivolous or irrelevant, including by reason of a failure by a consumer to provide sufficient information to investigate the disputed information.

(B) Notice of determination. Upon making any determination in accordance with subparagraph (A) that a dispute is frivolous or irrelevant, a consumer reporting agency shall notify the consumer of such determination not later than 5 business days after making such determination, by mail or, if authorized by the consumer for that purpose, by any other means available to the agency.

(C) Contents of notice. A notice under subparagraph (B) shall include

(i) the reasons for the determination under subparagraph (A); and

(ii) identification of any information required to investigate the disputed information, which may consist of a standardized form describing the general nature of such information.

(4) Consideration of consumer information. In conducting any reinvestigation under paragraph (1) with respect to disputed information in the file of any consumer, the consumer reporting agency shall review and consider all relevant information submitted by the consumer in the period described in paragraph (1)(A) with respect to such disputed information.

 (5) Treatment of inaccurate or unverifiable information.

 (A) In general. If, after any reinvestigation under paragraph (1) of any information disputed by a consumer, an item of the information is found to be inaccurate or incomplete or cannot be verified, the consumer reporting agency shall promptly delete that item of information from the consumer's file or modify that item of information, as appropriate, based on the results of the reinvestigation.

(B) Requirements relating to reinsertion of previously deleted material.

(i) Certification of accuracy of information. If any information is deleted from a consumer's file pursuant to subparagraph (A), the information may not be reinserted in the file by the consumer reporting agency unless the person who furnishes the information certifies that the information is complete and accurate.

(ii) Notice to consumer. If any information that has been deleted from a consumer's file pursuant to subparagraph (A) is reinserted in the file, the consumer reporting agency shall notify the consumer of the reinsertion in writing not later than 5 business days after the reinsertion or, if authorized by the consumer for that purpose, by any other means available to the agency.

(iii) Additional information. As part of, or in addition to, the notice under clause (ii), a consumer reporting agency shall provide to a consumer in writing not later than 5 business days after the date of the reinsertion

(I) a statement that the disputed information has been reinserted;

(II) the business name and address of any furnisher of information contacted and the telephone number of such furnisher, if reasonably available, or of any furnisher of information that contacted the consumer reporting agency, in connection with the reinsertion of such information; and

(III) a notice that the consumer has the right to add a statement to the consumer's file disputing the accuracy or completeness of the disputed information.

(C) Procedures to prevent reappearance. A consumer reporting agency shall maintain reasonable procedures designed to prevent the reappearance in a consumer's file, and in consumer reports on the consumer, of information that is deleted pursuant to this paragraph (other than information that is reinserted in accordance with subparagraph (B)(i)).

(D) Automated reinvestigation system. Any consumer reporting agency that compiles and maintains files on consumers on a nationwide basis shall implement an automated system through which furnishers of information to that consumer reporting agency may report the results of a reinvestigation that finds incomplete or inaccurate information in a consumer's file to other such consumer reporting agencies.

(6) Notice of results of reinvestigation.

 (A) In general. A consumer reporting agency shall provide written notice to a consumer of the results of a reinvestigation under this subsection not later than 5 business days after the completion of the reinvestigation, by mail or, if authorized by the consumer for that purpose, by other means available to the agency.

(B) Contents. As part of, or in addition to, the notice under subparagraph (A), a consumer reporting agency shall provide to a consumer in writing before the expiration of the 5-day period referred to in subparagraph (A)

(i) a statement that the reinvestigation is completed;

(ii) a consumer report that is based upon the consumer's file as that file is revised as a result of the reinvestigation;

(iii) a notice that, if requested by the consumer, a description of the procedure used to determine the accuracy and completeness of the information shall be provided to the consumer by the agency, including the business name and address of any furnisher of information contacted in connection with such information and the telephone number of such furnisher, if reasonably available;

(iv) a notice that the consumer has the right to add a statement to the consumer's file disputing the accuracy or completeness of the information; and

(v) a notice that the consumer has the right to request under subsection (d) that the consumer reporting agency furnish notifications under that subsection.

(7) Description of reinvestigation procedure. A consumer reporting agency shall provide to a consumer a description referred to in paragraph (6)(B)(iii) by not later than 15 days after receiving a request from the consumer for that description.

 (8) Expedited dispute resolution. If a dispute regarding an item of information in a consumer's file at a consumer reporting agency is resolved in accordance with paragraph (5)(A) by the deletion of the disputed information by not later than 3 business days after the date on which the agency receives notice of the dispute from the consumer in accordance with paragraph (1)(A), then the agency shall not be required to comply with paragraphs (2), (6), and (7) with respect to that dispute if the agency

(A) provides prompt notice of the deletion to the consumer by telephone;

(B) includes in that notice, or in a written notice that accompanies a confirmation and consumer report provided in accordance with subparagraph (C), a statement of the consumer's right to request under subsection (d) that the agency furnish notifications under that subsection; and

(C) provides written confirmation of the deletion and a copy of a consumer report on the consumer that is based on the consumer's file after the deletion, not later than 5 business days after making the deletion.

(b) Statement of dispute. If the reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth the nature of the dispute. The consumer reporting agency may limit such statements to not more than one hundred words if it provides the consumer with assistance in writing a clear summary of the dispute.

(c) Notification of consumer dispute in subsequent consumer reports. Whenever a statement of a dispute is filed, unless there is reasonable grounds to believe that it is frivolous or irrelevant, the consumer reporting agency shall, in any subsequent consumer report containing the information in question, clearly note that it is disputed by the consumer and provide either the consumer's statement or a clear and accurate codification or summary thereof.

(d) Notification of deletion of disputed information. Following any deletion of information which is found to be inaccurate or whose accuracy can no longer be verified or any notation as to disputed information, the consumer reporting agency shall, at the request of the consumer, furnish notification that the item has been deleted or the statement, codification or summary pursuant to subsection (b) or (c) of this section to any person specifically designated by the consumer who has within two years prior thereto received a consumer report for employment purposes, or within six months prior thereto received a consumer report for any other purpose, which contained the deleted or disputed information.

§ 612. Charges for certain disclosures <small>[15 U.S.C. § 1681j]</small>

(a) Reasonable charges allowed for certain disclosures.

(1) In general. Except as provided in subsections (b), (c), and (d), a consumer reporting agency may impose a reasonable charge on a consumer

 (A) for making a disclosure to the consumer pursuant to section 609 [§ 1681g], which charge

(i) shall not exceed $8; and

(ii) shall be indicated to the consumer before making the disclosure; and

(B) for furnishing, pursuant to 611(d) [§ 1681i], following a reinvestigation under section 611(a) [§ 1681i], a statement, codification, or summary to a person designated by the consumer under that section after the 30-day period beginning on the date of notification of the consumer under paragraph (6) or (8) of section 611(a) [§ 1681i] with respect to the reinvestigation, which charge

(i) shall not exceed the charge that the agency would impose on each designated recipient for a consumer report; and

(ii) shall be indicated to the consumer before furnishing such information.

(2) Modification of amount. The Federal Trade Commission shall increase the amount referred to in paragraph (1)(A)(I) on January 1 of each year, based proportionally on changes in the Consumer Price Index, with fractional changes rounded to the nearest fifty cents.

(b) Free disclosure after adverse notice to consumer. Each consumer reporting agency that maintains a file on a consumer shall make all disclosures pursuant to section 609 [§ 1681g] without charge to the consumer if, not later than 60 days after receipt by such consumer of a notification pursuant to section 615 [§ 1681m], or of a notification from a debt collection agency affiliated with that consumer reporting agency stating that the consumer's credit rating may be or has been adversely affected, the consumer makes a request under section 609 [§ 1681g].

(c) Free disclosure under certain other circumstances. Upon the request of the consumer, a consumer reporting agency shall make all disclosures pursuant to section 609 [§ 1681g] once during any 12-month period without charge to that consumer if the consumer certifies in writing that the consumer

(1) is unemployed and intends to apply for employment in the 60-day period beginning on the date on which the certification is made;

 (2) is a recipient of public welfare assistance; or

 (3) has reason to believe that the file on the consumer at the agency contains inaccurate information due to fraud.

(d) Other charges prohibited. A consumer reporting agency shall not impose any charge on a consumer for providing any notification required by this title or making any disclosure required by this title, except as authorized by subsection (a).

§ 613. Public record information for employment purposes [15 U.S.C. § 1681k]

(a) In general. A consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer's ability to obtain employment shall

(1) at the time such public record information is reported to the user of such consumer report, notify the consumer of the fact that public record information is being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported; or

 (2) maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer's ability to obtain employment is reported it is complete and up to date. For purposes of this paragraph, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item at the time of the report is reported.

(b) Exemption for national security investigations. Subsection (a) does not apply in the case of an agency or department of the United States Government that seeks to obtain and use a consumer report for employment purposes, if the head of the agency or department makes a written finding as prescribed under section 604(b)(4)(A).

§ 614. Restrictions on investigative consumer reports <small>[15 U.S.C. § 1681l]

Whenever a consumer reporting agency prepares an investigative consumer report, no adverse information in the consumer report (other than information which is a matter of public record) may be included in a subsequent consumer report unless such adverse information has been verified in the process of making such subsequent consumer report, or the adverse information was received within the three-month period preceding the date the subsequent report is furnished.

§ 615. Requirements on users of consumer reports [15 U.S.C. § 1681m]

(a) Duties of users taking adverse actions on the basis of information contained in consumer reports. If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall

(1) provide oral, written, or electronic notice of the adverse action to the consumer;

 (2) provide to the consumer orally, in writing, or electronically

 (A) the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person; and

(B) a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken; and

(3) provide to the consumer an oral, written, or electronic notice of the consumer's right

 (A) to obtain, under section 612 [§ 1681j], a free copy of a consumer report on the consumer from the consumer reporting agency referred to in paragraph (2), which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and

 (B) to dispute, under section 611 [§ 1681i], with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency.

(b) Adverse action based on information obtained from third parties other than consumer reporting agencies.

(1) In general. Whenever credit for personal, family, or household purposes involving a consumer is denied or the charge for such credit is increased either wholly or partly because of information obtained from a person other than a consumer reporting agency bearing upon the consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of such information shall, within a reasonable period of time, upon the consumer's written request for the reasons for such adverse action received within sixty days after learning of such adverse action, disclose the nature of the information to the consumer. The user of such information shall clearly and accurately disclose to the consumer his right to make such written request at the time such adverse action is communicated to the consumer.

 (2) Duties of person taking certain actions based on information provided by affiliate.

 (A) Duties, generally. If a person takes an action described in subparagraph (B) with respect to a consumer, based in whole or in part on information described in subparagraph (C), the person shall

(i) notify the consumer of the action, including a statement that the consumer may obtain the information in accordance with clause (ii); and

(ii) upon a written request from the consumer received within 60 days after transmittal of the notice required by clause (I), disclose to the consumer the nature of the information upon which the action is based by not later than 30 days after receipt of the request.

(B) Action described. An action referred to in subparagraph (A) is an adverse action described in section 603(k)(1)(A) [§ 1681a], taken in connection with a transaction initiated by the consumer, or any adverse action described in clause (i) or (ii) of section 603(k)(1)(B) [§ 1681a].

(C) Information described. Information referred to in subparagraph (A)

(i) except as provided in clause (ii), is information that

(I) is furnished to the person taking the action by a person related by common ownership or affiliated by common corporate control to the person taking the action; and

 (II) bears on the credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living of the consumer; and

 (ii) does not include

 (I) information solely as to transactions or experiences between the consumer and the person furnishing the information; or

 (II) information in a consumer report.

(c) Reasonable procedures to assure compliance. No person shall be held liable for any violation of this section if he shows by a preponderance of the evidence that at the time of the alleged violation he maintained reasonable procedures to assure compliance with the provisions of this section.

(d) Duties of users making written credit or insurance solicitations on the basis of information contained in consumer files.

(1) In general. Any person who uses a consumer report on any consumer in connection with any credit or insurance transaction that is not initiated by the consumer, that is provided to that person under section 604(c)(1)(B) [§ 1681b], shall provide with each written solicitation made to the consumer regarding the transaction a clear and conspicuous statement that

 (A) information contained in the consumer's consumer report was used in connection with the transaction;

(B) the consumer received the offer of credit or insurance because the consumer satisfied the criteria for credit worthiness or insurability under which the consumer was selected for the offer;

(C) if applicable, the credit or insurance may not be extended if, after the consumer responds to the offer, the consumer does not meet the criteria used to select the consumer for the offer or any applicable criteria bearing on credit worthiness or insurability or does not furnish any required collateral;

(D) the consumer has a right to prohibit information contained in the consumer's file with any consumer reporting agency from being used in connection with any credit or insurance transaction that is not initiated by the consumer; and

(E) the consumer may exercise the right referred to in subparagraph (D) by notifying a notification system established under section 604(e) [§ 1681b].

(2) Disclosure of address and telephone number. A statement under paragraph (1) shall include the address and toll-free telephone number of the appropriate notification system established under section 604(e) [§ 1681b].

 (3) Maintaining criteria on file. A person who makes an offer of credit or insurance to a consumer under a credit or insurance transaction described in paragraph (1) shall maintain on file the criteria used to select the consumer to receive the offer, all criteria bearing on credit worthiness or insurability, as applicable, that are the basis for determining whether or not to extend credit or insurance pursuant to the offer, and any requirement for the furnishing of collateral as a condition of the extension of credit or insurance, until the expiration of the 3-year period beginning on the date on which the offer is made to the consumer.

 (4) Authority of federal agencies regarding unfair or deceptive acts or practices not affected. This section is not intended to affect the authority of any Federal or State agency to enforce a prohibition against unfair or deceptive acts or practices, including the making of false or misleading statements in connection with a credit or insurance transaction that is not initiated by the consumer.

§ 616. Civil liability for willful noncompliance [15 U.S.C. § 1681n]

(a) In general. Any person who willfully fails to comply with any requirement imposed under this title with respect to any consumer is liable to that consumer in an amount equal to the sum of

(1) (A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; or

 (B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

(2) such amount of punitive damages as the court may allow; and

 (3) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney's fees as determined by the court.

(b) Civil liability for knowing noncompliance. Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose shall be liable to the consumer reporting agency for actual damages sustained by the consumer reporting agency or $1,000, whichever is greater.

(c) Attorney's fees. Upon a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney's fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

§ 617. Civil liability for negligent noncompliance [15 U.S.C. § 1681o]

(a) In general. Any person who is negligent in failing to comply with any requirement imposed under this title with respect to any consumer is liable to that consumer in an amount equal to the sum of

(1) any actual damages sustained by the consumer as a result of the failure;

 (2) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney's fees as determined by the court.

(b) Attorney's fees. On a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney's fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

§ 618. Jurisdiction of courts; limitation of actions [15 U.S.C. § 1681p]

An action to enforce any liability created under this title may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction, within two years from the date on which the liability arises, except that where a defendant has materially and willfully misrepresented any information required under this title to be disclosed to an individual and the information so misrepresented is material to the establishment of the defendant's liability to that individual under this title, the action may be brought at any time within two years after discovery by the individual of the misrepresentation.

§ 619. Obtaining information under false pretenses<small> [15 U.S.C. § 1681q]

Any person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both.

§ 620. Unauthorized disclosures by officers or employees <small>[15 U.S.C. § 1681r]

Any officer or employee of a consumer reporting agency who knowingly and willfully provides information concerning an individual from the agency's files to a person not authorized to receive that information shall be fined under title 18, United States Code, imprisoned for not more than 2 years, or both.

§ 621. Administrative enforcement<small> [15 U.S.C. § 1681s]

(a) (1) Enforcement by Federal Trade Commission. Compliance with the requirements imposed under this title shall be enforced under the Federal Trade Commission Act [15 U.S.C. §§ 41 et seq.] by the Federal Trade Commission with respect to consumer reporting agencies and all other persons subject thereto, except to the extent that enforcement of the requirements imposed under this title is specifically committed to some other government agency under subsection (b) hereof. For the purpose of the exercise by the Federal Trade Commission of its functions and powers under the Federal Trade Commission Act, a violation of any requirement or prohibition imposed under this title shall constitute an unfair or deceptive act or practice in commerce in violation of section 5(a) of the Federal Trade Commission Act [15 U.S.C. § 45(a)] and shall be subject to enforcement by the Federal Trade Commission under section 5(b) thereof [15 U.S.C. § 45(b)] with respect to any consumer reporting agency or person subject to enforcement by the Federal Trade Commission pursuant to this subsection, irrespective of whether that person is engaged in commerce or meets any other jurisdictional tests in the Federal Trade Commission Act. The Federal Trade Commission shall have such procedural, investigative, and enforcement powers, including the power to issue procedural rules in enforcing compliance with the requirements imposed under this title and to require the filing of reports, the production of documents, and the appearance of witnesses as though the applicable terms and conditions of the Federal Trade Commission Act were part of this title. Any person violating any of the provisions of this title shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act as though the applicable terms and provisions thereof were part of this title.

2) (A) In the event of a knowing violation, which constitutes a pattern or practice of violations of this title, the Commission may commence a civil action to recover a civil penalty in a district court of the United States against any person that violates this title. In such action, such person shall be liable for a civil penalty of not more than $2,500 per violation.

 (B) In determining the amount of a civil penalty under subparagraph (A), the court shall take into account the degree of culpability, any history of prior such conduct, ability to pay, effect on ability to continue to do business, and such other matters as justice may require.

 (3) Notwithstanding paragraph (2), a court may not impose any civil penalty on a person for a violation of section 623(a)(1) [§ 1681s-2] unless the person has been enjoined from committing the violation, or ordered not to commit the violation, in an action or proceeding brought by or on behalf of the Federal Trade Commission, and has violated the injunction or order, and the court may not impose any civil penalty for any violation occurring before the date of the violation of the injunction or order.

 (4) Neither the Commission nor any other agency referred to in subsection (b) may prescribe trade regulation rules or other regulations with respect to this title.

(b) Enforcement by other agencies. Compliance with the requirements imposed under this title with respect to consumer reporting agencies, persons who use consumer reports from such agencies, persons who furnish information to such agencies, and users of information that are subject to subsection (d) of section 615 [§ 1681m] shall be enforced under

(1) section 8 of the Federal Deposit Insurance Act [12 U.S.C. § 1818], in the case of

 (A) national banks, and Federal branches and Federal agencies of foreign banks, by the Office of the Comptroller of the Currency;

(B) member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25(a) [25A] of the Federal Reserve Act [12 U.S.C. §§ 601 et seq., §§ 611 et seq], by the Board of Governors of the Federal Reserve System; and

(C) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation;

(2) section 8 of the Federal Deposit Insurance Act [12 U.S.C. § 1818], by the Director of the Office of Thrift Supervision, in the case of a savings association the deposits of which are insured by the Federal Deposit Insurance Corporation;

 (3) the Federal Credit Union Act [12 U.S.C. §§ 1751 et seq.], by the Administrator of the National Credit Union Administration [National Credit Union Administration Board] with respect to any Federal credit union;

 (4) subtitle IV of title 49 [49 U.S.C. §§ 10101 et seq.], by the Secretary of Transportation, with respect to all carriers subject to the jurisdiction of the Surface Transportation Board;

 (5) the Federal Aviation Act of 1958 [49 U.S.C. Appx §§ 1301 et seq.], by the Secretary of Transportation with respect to any air carrier or foreign air carrier subject to that Act [49 U.S.C. Appx §§ 1301 et seq.]; and

 (6) the Packers and Stockyards Act, 1921 [7 U.S.C. §§ 181 et seq.] (except as provided in section 406 of that Act [7 U.S.C. §§ 226 and 227]), by the Secretary of Agriculture with respect to any activities subject to that Act.

The terms used in paragraph (1) that are not defined in this title or otherwise defined in section 3(s) of the Federal Deposit Insurance Act (12 U.S.C. § 1813(s)) shall have the meaning given to them in section 1(b) of the International Banking Act of 1978 (12 U.S.C. § 3101).

(c) State action for violations.

(1) Authority of states. In addition to such other remedies as are provided under State law, if the chief law enforcement officer of a State, or an official or agency designated by a State, has reason to believe that any person has violated or is violating this title, the State

 (A) may bring an action to enjoin such violation in any appropriate United States district court or in any other court of competent jurisdiction;

(B) subject to paragraph (5), may bring an action on behalf of the residents of the State to recover

(i) damages for which the person is liable to such residents under sections 616 and 617 [§§ 1681n and 1681o] as a result of the violation;

(ii) in the case of a violation of section 623(a) [§ 1681s-2], damages for which the person would, but for section 623(c) [§ 1681s-2], be liable to such residents as a result of the violation; or

(iii) damages of not more than $1,000 for each willful or negligent violation; and

(C) in the case of any successful action under subparagraph (A) or (B), shall be awarded the costs of the action and reasonable attorney fees as determined by the court.

(2) Rights of federal regulators. The State shall serve prior written notice of any action under paragraph (1) upon the Federal Trade Commission or the appropriate Federal regulator determined under subsection (b) and provide the Commission or appropriate Federal regulator with a copy of its complaint, except in any case in which such prior notice is not feasible, in which case the State shall serve such notice immediately upon instituting such action. The Federal Trade Commission or appropriate Federal regulator shall have the right

 (A) to intervene in the action;

(B) upon so intervening, to be heard on all matters arising therein;

(C) to remove the action to the appropriate United States district court; and

(D) to file petitions for appeal.

(3) Investigatory powers. For purposes of bringing any action under this subsection, nothing in this subsection shall prevent the chief law enforcement officer, or an official or agency designated by a State, from exercising the powers conferred on the chief law enforcement officer or such official by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the production of documentary and other evidence.

 (4) Limitation on state action while federal action pending. If the Federal Trade Commission or the appropriate Federal regulator has instituted a civil action or an administrative action under section 8 of the Federal Deposit Insurance Act for a violation of this title, no State may, during the pendency of such action, bring an action under this section against any defendant named in the complaint of the Commission or the appropriate Federal regulator for any violation of this title that is alleged in that complaint.

 (5) Limitations on state actions for violation of section 623(a)(1) [§ 1681s-2].

 (A) Violation of injunction required. A State may not bring an action against a person under paragraph (1)(B) for a violation of section 623(a)(1) [§ 1681s-2], unless

(i) the person has been enjoined from committing the violation, in an action brought by the State under paragraph (1)(A); and

(ii) the person has violated the injunction.

(B) Limitation on damages recoverable. In an action against a person under paragraph (1)(B) for a violation of section 623(a)(1) [§ 1681s-2], a State may not recover any damages incurred before the date of the violation of an injunction on which the action is based.

(d) Enforcement under other authority. For the purpose of the exercise by any agency referred to in subsection (b) of this section of its powers under any Act referred to in that subsection, a violation of any requirement imposed under this title shall be deemed to be a violation of a requirement imposed under that Act. In addition to its powers under any provision of law specifically referred to in subsection (b) of this section, each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this title any other authority conferred on it by law. Notwithstanding the preceding, no agency referred to in subsection (b) may conduct an examination of a bank, savings association, or credit union regarding compliance with the provisions of this title, except in response to a complaint (or if the agency otherwise has knowledge) that the bank, savings association, or credit union has violated a provision of this title, in which case, the agency may conduct an examination as necessary to investigate the complaint. If an agency determines during an investigation in response to a complaint that a violation of this title has occurred, the agency may, during its next 2 regularly scheduled examinations of the bank, savings association, or credit union, examine for compliance with this title.

(e) Interpretive authority. The Board of Governors of the Federal Reserve System may issue interpretations of any provision of this title as such provision may apply to any persons identified under paragraph (1), (2), and (3) of subsection (b), or to the holding companies and affiliates of such persons, in consultation with Federal agencies identified in paragraphs (1), (2), and (3) of subsection (b).

§ 622. Information on overdue child support obligations <small>[15 U.S.C. § 1681s-1] </small>

Notwithstanding any other provision of this title, a consumer reporting agency shall include in any consumer report furnished by the agency in accordance with section 604 [§ 1681b] of this title, any information on the failure of the consumer to pay overdue support which

(1) is provided

 (A) to the consumer reporting agency by a State or local child support enforcement agency; or

(B) to the consumer reporting agency and verified by any local, State, or Federal government agency; and

(2) antedates the report by 7 years or less.

§ 623. Responsibilities of furnishers of information to consumer reporting agencies <small>[15 U.S.C. § 1681s-2]</small>

(a) Duty of furnishers of information to provide accurate information.

(1) Prohibition.

 (A) Reporting information with actual knowledge of errors. A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or consciously avoids knowing that the information is inaccurate.

(B) Reporting information after notice and confirmation of errors. A person shall not furnish information relating to a consumer to any consumer reporting agency if

(i) the person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and

(ii) the information is, in fact, inaccurate.

(C) No address requirement. A person who clearly and conspicuously specifies to the consumer an address for notices referred to in subparagraph (B) shall not be subject to subparagraph (A); however, nothing in subparagraph (B) shall require a person to specify such an address.

(2) Duty to correct and update information. A person who

 (A) regularly and in the ordinary course of business furnishes information to one or more consumer reporting agencies about the person's transactions or experiences with any consumer; and

(B) has furnished to a consumer reporting agency information that the person determines is not complete or accurate,

shall promptly notify the consumer reporting agency of that determination and provide to the agency any corrections to that information, or any additional information, that is necessary to make the information provided by the person to the agency complete and accurate, and shall not thereafter furnish to the agency any of the information that remains not complete or accurate.

 (3) Duty to provide notice of dispute. If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.

 (4) Duty to provide notice of closed accounts. A person who regularly and in the ordinary course of business furnishes information to a consumer reporting agency regarding a consumer who has a credit account with that person shall notify the agency of the voluntary closure of the account by the consumer, in information regularly furnished for the period in which the account is closed.

 (5) Duty to provide notice of delinquency of accounts. A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall, not later than 90 days after furnishing the information, notify the agency of the month and year of the commencement of the delinquency that immediately preceded the action.

(b) Duties of furnishers of information upon notice of dispute.

(1) In general. After receiving notice pursuant to section 611(a)(2) [§ 1681i] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall

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

(B) review all relevant information provided by the consumer reporting agency pursuant to section 611(a)(2) [§ 1681i];

(C) report the results of the investigation to the consumer reporting agency; and

(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis.

(2) Deadline. A person shall complete all investigations, reviews, and reports required under paragraph (1) regarding information provided by the person to a consumer reporting agency, before the expiration of the period under section 611(a)(1) [§ 1681i] within which the consumer reporting agency is required to complete actions required by that section regarding that information.

(c) Limitation on liability. Sections 616 and 617 [§§ 1681n and 1681o] do not apply to any failure to comply with subsection (a), except as provided in section 621(c)(1)(B) [§ 1681s].

(d) Limitation on enforcement. Subsection (a) shall be enforced exclusively under section 621 [§ 1681s] by the Federal agencies and officials and the State officials identified in that section.

§ 624. Relation to State laws <small>[15 U.S.C. § 1681t]</small>

(a) In general. Except as provided in subsections (b) and (c), this title does not annul, alter, affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to the collection, distribution, or use of any information on consumers, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency.

(b) General exceptions. No requirement or prohibition may be imposed under the laws of any State

(1) with respect to any subject matter regulated under

 (A) subsection (c) or (e) of section 604 [§ 1681b], relating to the prescreening of consumer reports;

(B) section 611 [§ 1681i], relating to the time by which a consumer reporting agency must take any action, including the provision of notification to a consumer or other person, in any procedure related to the disputed accuracy of information in a consumer's file, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996;

(C) subsections (a) and (b) of section 615 [§ 1681m], relating to the duties of a person who takes any adverse action with respect to a consumer;

(D) section 615(d) [§ 1681m], relating to the duties of persons who use a consumer report of a consumer in connection with any credit or insurance transaction that is not initiated by the consumer and that consists of a firm offer of credit or insurance;

(E) section 605 [§ 1681c], relating to information contained in consumer reports, except that this subparagraph shall not apply to any State law in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996; or

(F) section 623 [§ 1681s-2], relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply

(i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996); or

(ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996);

(2) with respect to the exchange of information among persons affiliated by common ownership or common corporate control, except that this paragraph shall not apply with respect to subsection (a) or (c)(1) of section 2480e of title 9, Vermont Statutes Annotated (as in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996); or

 (3) with respect to the form and content of any disclosure required to be made under section 609(c) [§ 1681g].

(c) Definition of firm offer of credit or insurance. Notwithstanding any definition of the term "firm offer of credit or insurance" (or any equivalent term) under the laws of any State, the definition of that term contained in section 603(l) [§ 1681a] shall be construed to apply in the enforcement and interpretation of the laws of any State governing consumer reports.

(d) Limitations. Subsections (b) and (c)

(1) do not affect any settlement, agreement, or consent judgment between any State Attorney General and any consumer reporting agency in effect on the date of enactment of the Consumer Credit Reporting Reform Act of 1996; and

 (2) do not apply to any provision of State law (including any provision of a State constitution) that

 (A) is enacted after January 1, 2004;

(B) states explicitly that the provision is intended to supplement this title; and

(C) gives greater protection to consumers than is provided under this title.

§ 625. Disclosures to FBI for counterintelligence purposes <small>[15 U.S.C. § 1681u] </small>

(a) Identity of financial institutions. Notwithstanding section 604 [§ 1681b] or any other provision of this title, a consumer reporting agency shall furnish to the Federal Bureau of Investigation the names and addresses of all financial institutions (as that term is defined in section 1101 of the Right to Financial Privacy Act of 1978 [12 U.S.C. § 3401]) at which a consumer maintains or has maintained an account, to the extent that information is in the files of the agency, when presented with a written request for that information, signed by the Director of the Federal Bureau of Investigation, or the Director's designee, which certifies compliance with this section. The Director or the Director's designee may make such a certification only if the Director or the Director's designee has determined in writing that

(1) such information is necessary for the conduct of an authorized foreign counterintelligence investigation; and

 (2) there are specific and articulable facts giving reason to believe that the consumer

 (A) is a foreign power (as defined in section 101 of the Foreign Intelligence Surveillance Act of 1978 [50 U.S.C. § 1801]) or a person who is not a United States person (as defined in such section 101) and is an official of a foreign power; or

(B) is an agent of a foreign power and is engaging or has engaged in an act of international terrorism (as that term is defined in section 101(c) of the Foreign Intelligence Surveillance Act of 1978 [50 U.S.C. § 1801(c)]) or clandestine intelligence activities that involve or may involve a violation of criminal statutes of the United States.

(b) Identifying information. Notwithstanding the provisions of section 604 [§ 1681b] or any other provision of this title, a consumer reporting agency shall furnish identifying information respecting a consumer, limited to name, address, former addresses, places of employment, or former places of employment, to the Federal Bureau of Investigation when presented with a written request, signed by the Director or the Director's designee, which certifies compliance with this subsection. The Director or the Director's designee may make such a certification only if the Director or the Director's designee has determined in writing that

(1) such information is necessary to the conduct of an authorized counterintelligence investigation; and

 (2) there is information giving reason to believe that the consumer has been, or is about to be, in contact with a foreign power or an agent of a foreign power (as defined in section 101 of the Foreign Intelligence Surveillance Act of 1978 [50 U.S.C. § 1801]).

(c) Court order for disclosure of consumer reports. Notwithstanding section 604 [§ 1681b] or any other provision of this title, if requested in writing by the Director of the Federal Bureau of Investigation, or a designee of the Director, a court may issue an order ex parte directing a consumer reporting agency to furnish a consumer report to the Federal Bureau of Investigation, upon a showing in camera that

(1) the consumer report is necessary for the conduct of an authorized foreign counterintelligence investigation; and

 (2) there are specific and articulable facts giving reason to believe that the consumer whose consumer report is sought

 (A) is an agent of a foreign power, and

(B) is engaging or has engaged in an act of international terrorism (as that term is defined in section 101(c) of the Foreign Intelligence Surveillance Act of 1978 [50 U.S.C. § 1801(c)]) or clandestine intelligence activities that involve or may involve a violation of criminal statutes of the United States.

The terms of an order issued under this subsection shall not disclose that the order is issued for purposes of a counterintelligence investigation.

(d) Confidentiality. No consumer reporting agency or officer, employee, or agent of a consumer reporting agency shall disclose to any person, other than those officers, employees, or agents of a consumer reporting agency necessary to fulfill the requirement to disclose information to the Federal Bureau of Investigation under this section, that the Federal Bureau of Investigation has sought or obtained the identity of financial institutions or a consumer report respecting any consumer under subsection (a), (b), or (c), and no consumer reporting agency or officer, employee, or agent of a consumer reporting agency shall include in any consumer report any information that would indicate that the Federal Bureau of Investigation has sought or obtained such information or a consumer report.

(e) Payment of fees. The Federal Bureau of Investigation shall, subject to the availability of appropriations, pay to the consumer reporting agency assembling or providing report or information in accordance with procedures established under this section a fee for reimbursement for such costs as are reasonably necessary and which have been directly incurred in searching, reproducing, or transporting books, papers, records, or other data required or requested to be produced under this section.

(f) Limit on dissemination. The Federal Bureau of Investigation may not disseminate information obtained pursuant to this section outside of the Federal Bureau of Investigation, except to other Federal agencies as may be necessary for the approval or conduct of a foreign counterintelligence investigation, or, where the information concerns a person subject to the Uniform Code of Military Justice, to appropriate investigative authorities within the military department concerned as may be necessary for the conduct of a joint foreign counterintelligence investigation.

(g) Rules of construction. Nothing in this section shall be construed to prohibit information from being furnished by the Federal Bureau of Investigation pursuant to a subpoena or court order, in connection with a judicial or administrative proceeding to enforce the provisions of this Act. Nothing in this section shall be construed to authorize or permit the withholding of information from the Congress.

(h) Reports to Congress. On a semiannual basis, the Attorney General shall fully inform the Permanent Select Committee on Intelligence and the Committee on Banking, Finance and Urban Affairs of the House of Representatives, and the Select Committee on Intelligence and the Committee on Banking, Housing, and Urban Affairs of the Senate concerning all requests made pursuant to subsections (a), (b), and (c).

(i) Damages. Any agency or department of the United States obtaining or disclosing any consumer reports, records, or information contained therein in violation of this section is liable to the consumer to whom such consumer reports, records, or information relate in an amount equal to the sum of

(1) $100, without regard to the volume of consumer reports, records, or information involved;

 (2) any actual damages sustained by the consumer as a result of the disclosure;

 (3) if the violation is found to have been willful or intentional, such punitive damages as a court may allow; and

 (4) in the case of any successful action to enforce liability under this subsection, the costs of the action, together with reasonable attorney fees, as determined by the court.

(j) Disciplinary actions for violations. If a court determines that any agency or department of the United States has violated any provision of this section and the court finds that the circumstances surrounding the violation raise questions of whether or not an officer or employee of the agency or department acted willfully or intentionally with respect to the violation, the agency or department shall promptly initiate a proceeding to determine whether or not disciplinary action is warranted against the officer or employee who was responsible for the violation.

(k) Good-faith exception. Notwithstanding any other provision of this title, any consumer reporting agency or agent or employee thereof making disclosure of consumer reports or identifying information pursuant to this subsection in good-faith reliance upon a certification of the Federal Bureau of Investigation pursuant to provisions of this section shall not be liable to any person for such disclosure under this title, the constitution of any State, or any law or regulation of any State or any political subdivision of any State.

(l) Limitation of remedies. Notwithstanding any other provision of this title, the remedies and sanctions set forth in this section shall be the only judicial remedies and sanctions for violation of this section.

(m) Injunctive relief. In addition to any other remedy contained in this section, injunctive relief shall be available to require compliance with the procedures of this section. In the event of any successful action under this subsection, costs together with reasonable attorney fees, as determined by the court, may be recovered.

Legislative History

House Reports: No. 91-975 (Comm. on Banking and Currency) and No. 91-1587 (Comm. Of Conference)

Senate Reports: No. 91-1139 accompanying S. 3678 (Comm. on Banking and Currency)

Congressional Record, Vol. 116 (1970)</small>

May 25, considered and passed House.
Sept. 18, considered and passed Senate, amended.
Oct. 9, Senate agreed to conference report.
Oct. 13, House agreed to conference report.

Enactment:

Public Law No. 91-508 (October 26, 1970):

The reporting periods have been lengthened for certain adverse information pertaining to U.S. Government insured or guaranteed student loans, or pertaining to national direct student loans. See sections 430A(f) and 463(c)(3) of the Higher Education Act of 1965, 20 U.S.C. 1080a(f) and 20 U.S.C. 1087cc(c)(3), respectively.

Should read "paragraphs (4) and (5) ..." Prior Section 605(a)(6) was amended and redesignated as Section 605(a)(5) in November  1998.