Announced Action for May 28, 2004

For Your Information

Commission comment to the federal banking agencies and National Credit Union Administration: The Federal Trade Commission has submitted comments to the federal banking agencies and the National Credit Union Administration (NCUA) to aid in their rulemaking proceeding, as directed by Congress, to implement the medical privacy provisions of the Fair and Accurate Credit Transactions Act (FACTA). Section 411 of FACTA amends the Fair Credit Reporting Act (FCRA) to include a new section prohibiting creditors from obtaining or using “medical information” in connection with credit eligibility determinations.

The Commission’s comment expresses concern that only those creditors subject to the jurisdiction of one of the banking agencies or the NCUA would benefit from the exceptions created by their proposed rules. According to the Commission’s comments, this “may unnecessarily distort markets for loans and limit consumers’ choice of lender.” The FTC concludes that “consumers who need or would benefit from a creditor’s consideration of medical information might be able to obtain credit only from a bank, thrift, or Federal credit union,” lenders who may qualify for an exception to the proposed rules.

The Commission’s comment recommends that the banking agencies and NCUA read section 411 as permitting a creditor to use medical information in certain circumstances where Congress did not intend to limit such consideration, such as (1) to determine whether to pay credit insurance or debt cancellation benefits; (2) to process transactions and maintain accounts; (3) to evaluate collateral; (4) to allow providers of medical products and services to continue to bill customers; and (5) in the same manner that the creditor could consider such information when obtained from a consumer reporting agency.

The Commission vote to authorize staff to file the comments was 5-0. (FTC File No. P044804, staff contact is Andrew Smith, Division of Financial Practices, 202-326-3224)

Copies of the documents mentioned in this release are available from the FTC’s Web site at and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

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