Advisory Opinion to Cohan (06-29-99)

Division of Financial Practices
Clarke W. Brinckerhoff
Attorney
202-326-3224

June 29, 1999

Mr. Ben Cohan
Chase Credit Research Corp.
6350 Laurel Canyon Blvd.
North Hollywood, CA 91606

Dear Mr. Cohan:

This responds to your letter asking "if a consumer reporting agency (CRA) who is a reseller of credit reports (such as a mortgage credit reporting agency) and has no affiliation with any of the three main credit repositories would be required ... to provide a toll free telephone number" by Section 615(a)(2)(A) of the Fair Credit Reporting Act (FCRA) (your emphasis). For the reasons set forth below, we answer in the negative.

Section 609(c)(1)(B) of the FCRA imposes the requirement of establishing a toll-free number at which personnel are available only on a "consumer reporting agency that compiles and maintains files on consumers on a nationwide basis." Section 603(p) defines the quoted phrase to include only CRAs whose manner of business includes assembling or evaluating, and maintaining for the purpose of furnishing consumer reports to third parties, both "(1) [p]ublic record information (and) (2)[c]redit account information from persons who furnish that information regularly and in the ordinary course of business." Section 615(a)(2)(A) requires that users of consumer reports from such a CRA report that number when they supply required adverse action notices to consumers.

Thus, the issue of whether or not a reseller of consumer reports is required to establish a toll-free number turns on whether or not it is a "nationwide" CRA under the definition set forth in Section 603(p), which was added to the FCRA by the Consumer Credit Reporting Reform Act of 1996.(1) In our view, it is not. The definition clearly covers major credit data repositories, because they provide consumer reports that include public record information and credit account information they regularly receive from creditors. The definition does not appear to include resellers that only obtain credit reports from other CRAs for resale to a customer, and do not receive credit account information from creditors on a regular basis.

The legislative history of Section 603(p) demonstrates that our interpretation of its terms is accurate. The explanation of this provision by Rep. Joseph Kennedy, in the context of a predecessor bill that contained the new definition,(2) leaves no doubt that Congress intended to limit its application to major nationwide repositories of consumer credit data and therefore exclude mortgage reporting services and other resellers from its coverage:

Only three systems (Equifax, Trans Union, and TRW) are truly nationwide consumer reporting agencies which compile and maintain consumers' files on an automated basis.(3) The 3 repositories we mentioned above regularly engage in the practice of gathering or evaluating public record information and credit account information from credit grantors and others who furnish such information regularly and in the ordinary course of business on consumers residing in substantially all of the 50 states.

...Companies involved in (mortgage reporting) and similar activities are not meant to be included under the definition of a nationwide consumer reporting agency.

140 Cong. Rec. 25,871 (1994) (statement of Rep. Kennedy).

Based on the statutory language and clear statement of Congressional intent, we do not believe that a reseller such as a mortgage reporting service is a "nationwide" CRA "that maintains files on consumers on a nationwide basis" under Section 603(p). Thus, this type of CRA is not required by Section 609(c)(1)(B) to establish a toll-free telephone number, and a user of its services complies with Section 615(a)(2)(A) by providing the telephone number which it commonly uses to respond to consumers.

The opinions set forth in this informal staff letter are not binding on the Commission.

Sincerely yours,

Clarke W. Brinckerhoff

1. Public Law 104-208, Title II, Subtitle D, Chapter 1, Section 2402(g).

2. The new Section 603(p) definition in S. 783, the bill on which Rep. Kennedy was commenting, is the one that became law.

3. TRW, one of the three nationwide CRAs cited by Rep. Kennedy, was subsequently acquired by another company and now operates under the name Experian. In a subsequent portion of his remarks, the Congressman noted the possibility that at some point in the future more than three entities might meet the definition of "nationwide" CRA:

While the expression, "consumer reporting agency that compiles and maintains files on consumers on a nationwide basis," would presently apply only to the three companies identified above, we should recognize the possibility exists that some other company may someday decide to engage in this activity. If that company meets all the terms and conditions, as we have attempted to define them, as an automated nationwide consumer reporting agency, the provisions of this bill regarding such nationwide consumer reporting agencies would be applicable.