The Federal Trade Commission has issued its final rule regarding free annual credit reports under the Fair and Accurate Credit Transactions Act (FACTA) and the Fair Credit Reporting Act (FCRA). FACTA, which was enacted on December 4, 2003, amends the FCRA and requires, among other things, that the three nationwide consumer reporting agencies (CRAs) – Equifax, Experian, and Trans Union – provide to consumers, upon request, a free copy of their credit report once every 12 months.
The Commission published a notice of proposed rulemaking in the Federal Register on March 19, 2004, and accepted comments until April 16, 2004. The Commission received more than 2,300 comments from consumers, consumer advocates, elected officials, industry members, and trade associations.
The final rule contains many of the provisions of the proposed rule, with some modifications. Under the final rule, the nationwide CRAs must establish a “centralized source” for accepting consumer requests for free credit reports (called annual file disclosures in the final rule). This centralized source must include a dedicated Internet Web site, a toll-free telephone number, and a postal address.
The final rule also provides for a gradual, structured roll-out of the centralized source. The centralized source will become available in cumulative stages, over a period of nine months, rolling-out from west to east beginning December 1, 2004. The entire transition will be complete by September 1, 2005. Consumers will become eligible on the following schedule: Western states (Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming) will become eligible on December 1, 2004; Midwestern states (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin) will become eligible on March 1, 2005; Southern states (Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Oklahoma, South Carolina, Tennessee, and Texas ) will become eligible on June 1, 2005; and Eastern states (Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia), Puerto Rico, and all U.S. territories will become eligible on September 1, 2005.
Similar to the proposal, the final rule provides that the centralized source:
- Must have adequate capacity to accept requests from the reasonably anticipated volume of consumers making requests;
- May collect only as much personally identifiable information as necessary to process requests;
- Must provide clear and easily understandable information and instructions on how to make requests; and
- May not include any advertising or marketing that interferes with, detracts from, or undermines the purpose of the centralized source.
In addition, like the proposed rule, the final rule provides nationwide CRAs with relief from the capacity requirements of the final rule during times of unusually heavy request volume. In those circumstances, nationwide CRAs are permitted to place consumer requests in a queue for processing, or request that consumers return to the centralized source at a reasonable later time.
The final rule also includes requirements that nationwide CRAs develop and implement reasonable procedures to anticipate the volume of consumer requests, including contingency plans.
The final rule also limits the use and disclosure of personally identifiable information collected through the centralized source. It provides that personally identifiable information collected as the result of a consumer request for a required disclosure, such as a free credit report, can only be used to process the consumer’s request, to update the nationwide CRAs’ consumer reporting databases, to process transactions the consumer requested at the same time as a request for a free annual credit report, and to comply with applicable law.
In addition, the final rule requires nationwide specialty CRAs – CRAs that maintain specific types of files on consumers, such as employment history, tenant history, medical records, and insurance claims – to maintain a toll-free telephone number through which consumers may request a free copy of their credit report once every 12 months.
The Commission vote to approve the final rule and the publication of the Federal Register notice was 5-0.
Copies of the Federal Register notice are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
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