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Fair Debt Collection Practices Act

David Traywick — Sat, 16 Feb 2013 07:41:00 GMT

Debt Collectors are out of control. These are some of the foulest human beings

walking the planet. And they routinely breach your rights. Below the fold is the entire

text of the Federal Fair Debt Collection Practices Act. If you suspect you're rights

have been violated by a debt collector, telephone Traywick Law Offices today.

________________________________________________________________

THE FAIR DEBT COLLECTION PRACTICES ACT

As amended by Pub. L. 109-351, §§ 801-02, 120 Stat. 1966 (2006)

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 Commission

§ 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 15 USC 1601 note

§ 801. Short Title

This title may be cited as the “Fair Debt Collection Practices

Act.”

§ 802. Congressional findings and declaration of purpose

(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.

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

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.

15 USC 1601 note

15 USC 1692

15 USC 1692a

(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;

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.

§ 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

the communication from the debt collector.

§ 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

15 USC 1692b

15 USC 1692c

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.

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

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.

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

15 USC 1692d

§ 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;

(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.

15 USC 1692e

(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

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

or disablement.

15 USC 1692f

(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

(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 credi

15 USC 1692g

tor, 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. Collection activities and communications that

do not otherwise violate this title 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.

under this section may not be construed by any court as an

admission of liability by the consumer.

(d) 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) The sending or delivery of any form or notice which

does not relate to the collection of a debt and is expressly

required by the Internal Revenue Code of 1986, title V of

Gramm-Leach-Bliley Act, 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.

§ 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 1692h

§ 811. Legal actions by debt collectors

(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.

§ 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 813 for failure to comply with a provision

of this title.

§ 813. Civil liability

(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—

15 USC 1692i

15 USC 1692j

15 USC 1692k

(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;

(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.

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.

§ 814. Administrative enforcement

(a) Compliance with this title shall be enforced by the Commission,

except to the extent 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—

15 USC 1692l

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

Federal Reserve Act, by the Board of Governors of

the Federal Reserve System; and

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, 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, by the Administrator of

the National Credit Union Administration with respect

to any Federal credit union;

(4) the Acts to regulate commerce, 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, 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.

§ 814 15 USC 1692l

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).

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.

§ 815. Reports to Congress by the Commission

(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.

15 USC 1692m

§ 814 15 USC 1692l

§ 816. Relation to State laws

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.

§ 817. Exemption for State regulation

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.

§ 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 803(6), 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;

15 USC 1692n

15 USC 1692o

15 USC 1692p

(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

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.

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, United States Code), 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 3(6) of the Check Clearing for the 21st

Century Act.

(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.

§ 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.

15 USC 1692 note

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 (Sept. 20, 1977)

Amendments: Public Law Nos.

99-361 (July 9, 1986)

101-73 (Aug. 9, 1989)

102-242 (Dec. 19, 1991)

102-550 (Oct. 28, 1992)

104-88 (Dec. 29, 1995)

104-208 (Sept. 30, 1996)

109-351 (Oct. 13, 2006)

Revised January 2009

FOR THE CONSUMER1-877-FTC-HELPftc.govFEDERAL TRADE COMMISSION

Fair Credit Reporting Act

David Traywick — Sat, 16 Feb 2013 07:23:00 GMT

This post includes the full text of the Fair Credit Reporting Act. Read it at your

own risk. Application of the Fair Credit Reporting Act is difficult even for

attorneys. Most tend to refer these sorts of claims to Traywick Law Offices

or other consumer protection attorneys rather than tackle them.

Contact Traywick Law Offices for help correcting errors on your credit report.

Don't pay higher rates of interest or fool with the credit reporting bureaus and

agencies. They aren't interested in fixing your report. And even if they are, the

original creditor is not. Telephone today and collect for damages.

_________________________________________________________________

THE FAIR CREDIT REPORTING ACT

TABLE OF CONTENTS

§ 601 Short title

§ 602 Congressional findings and statement of purpose

§ 603 Definitions; rules of construction

§ 604 Permissible purposes of consumer reports

§ 605A Identity theft prevention; fraud alerts and active duty alerts

§ 605B Block of information resulting from identity theft

§ 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 Affiliate sharing

§ 625 Relation to state laws

§ 626 Disclosures to FBI for counterintelligence purposes

§ 627 Disclosures to governmental agencies for counterterrorism purposes

§ 628 Disposal of records

§ 629 Corporate and technological circumvention prohibited

July 30, 2004 2

§ 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]

(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 [15 U.S.C. § 1681a]

(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.

(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

July 30, 2004 3

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. Except as provided in paragraph (3), the term "consumer report" does

not include

(A)

subject to section 624, 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) 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

July 30, 2004

to any person related by common ownership or affiliated by corporate control, if

the information is-

(A)

medical information;

(B)

an individualized list or description based on the payment transactions of the

consumer for medical products or services; or

(C)

an aggregate list of identified consumers based on payment transactions for

medical products or services.

(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” -(

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-(

the past, present, or future physical, mental, or behavioral health or

condition of an individual;

(B)

the provision of health care to an individual; or

(C)

the payment for the provision of health care to an individual.

July 30, 2004

(2) does not include the age or gender of a consumer, demographic information 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 condition of a consumer, including the existence or value of

any insurance policy.

(j) Definitions Relating to Child Support Obligations

(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) 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

July 30, 2004

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) 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) 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) The term “State” means any State, the Commonwealth of Puerto Rico, the District of

Columbia, and any territory or possession of the United States.

July 30, 2004

(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

July 30, 2004

(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) 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.

(q) Definitions relating to fraud alerts.

(1) The term “active duty military consumer” means a consumer in military service

who-(

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

(B)

is assigned to service away from the usual duty station of the consumer.

(2) The terms “fraud alert” and “active duty alert” mean a statement in the file of a

consumer that-(

notifies all prospective users of a consumer report relating to the consumer

that the consumer may be a victim of fraud, including identity theft, or is

an active duty military consumer, as applicable; and

(B)

is presented in a manner that facilitates a clear and conspicuous view of

the statement described in subparagraph (A) by any person requesting such

consumer report.

(3) The term “identity theft” means a fraud committed using the identifying

information of another person, subject to such further definition as the

Commission may prescribe, by regulation.

(4) The term “identity theft report” has the meaning given that term by rule of the

Commission, and means, at a minimum, a report-(

that alleges an identity theft;

July 30, 2004

(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 Commission; and

(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) 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) The term “card issuer” means-(

a credit card issuer, in the case of a credit card; and

(B)

a debit card issuer, in the case of a debit card.

(2) The term “credit card” has the same meaning as in section 103 of the Truth in

Lending Act.

(3) The term “debit card” means any card issued by a financial institution 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) The terms “account” and “electronic fund transfer” have the same meanings as in

section 903 of the Electronic Fund Transfer Act.

(5) The terms “credit” and “creditor” have the same meanings as in section 702 of the

Equal Credit Opportunity Act.

(s) The term “Federal banking agency” has the same meaning as in section 3 of the

Federal Deposit Insurance Act.

(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.

(u) The term “reseller” means a consumer reporting agency that-(

1) assembles and merges information contained in the database of another consumer

reporting agency or multiple consumer reporting agencies concerning any

July 30, 2004

consumer for purposes of furnishing such information to any third party, to the

extent of such activities; and

(2) does not maintain a database of the assembled or merged information from which

new consumer reports are produced.

(v) The term “Commission” means the Federal Trade Commission.

(w) The term “nationwide specialty consumer reporting agency” means a consumer

reporting agency that compiles and maintains files on consumers on a nationwide

basis relating to-(

1) medical records or payments;

(2) residential or tenant history;

(3) check writing history;

(4) employment history; or

(5) insurance claims.

(x) Exclusion of Certain Communications for Employee Investigations

(1) A communication is described in this subsection if-(

but for subsection (d)(2)(D), the communication would be a consumer

report;

(B)

the communication is made to an employer in connection with an

investigation of–

(i)

suspected misconduct relating to employment; or

(ii)

compliance with Federal, State, or local laws and regulations, 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 capacity; and

(D)

the communication is not provided to any person except-(

to the employer or an agent of the employer;

(ii)

to any Federal or State officer, agency, or department, or any officer,

agency, or department of a unit of general local government;

July 30, 2004

(iii)

to any self-regulatory organization with regulatory authority over the

activities of the employer or employee;

(iv)

as otherwise required by law; or

(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.

(3) For purposes of this subsection, the term “self-regulatory organization” includes any

self-regulatory organization (as defined in section 3(a)(26) of the Securities

Exchange Act of 1934), any entity established 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.

§ 604.

Permissible purposes of consumer reports [15 U.S.C. § 1681b]

(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

July 30, 2004

(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

July 30, 2004

(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-(

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-(

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-(

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

July 30, 2004

(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-(

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).1

(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-(

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.

1The references in Sections 604(b)(3)(A) and 604(b)(3)(B) should be to Section 609(c)(1), not (c)(3) that no

longer exists as the result of Congress’ re-organization of Section 609(c) in 2003 (FACT Act).

July 30, 2004

(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-(

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-(

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

July 30, 2004

(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-(

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)

The term “classified information” means information that is protected

from unauthorized disclosure under Executive Order No. 12958 or

successor orders.

(ii)

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.

initiated by the consumer.

July 30, 2004

(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

July 30, 2004

(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 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

(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 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

(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

July 30, 2004

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) 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-(

if furnished in connection with an insurance transaction, the consumer

affirmatively consents to the furnishing of the report;

July 30, 2004

(B)

if furnished for employment purposes or in connection with a credit

transaction-(

the information to be furnished is relevant to process or effect the

employment or credit transaction; and

(ii)

the consumer provides specific written consent for the furnishing of the

report that describes in clear and conspicuous language the use for

which the information will be furnished; or

(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 information, other than account status or

amounts, is restricted or reported using codes that do not identify, or do

not provide information sufficient to infer, the specific provider or the

nature of such services, products, or devices, as provided in section

605(a)(6).

(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 contact 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) 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-(

in connection with the business of insurance or annuities, including the

activities described in section 18B of the model Privacy of Consumer

Financial and Health Information Regulation issued by the National

Association of Insurance Commissioners (as in effect on January 1, 2003);

(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

(C)

as otherwise determined to be necessary and appropriate, by regulation or

order and subject to paragraph (6), by the Commission, any Federal

banking agency or the National Credit Union Administration (with respect

to any financial institution subject to the jurisdiction of such agency or

Administration under paragraph (1), (2), or (3) of section 621(b), or the

applicable State insurance authority (with respect to any person engaged in

providing insurance or annuities).

July 30, 2004

(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 necessary to carry out the purpose

for which the information was initially disclosed, or as otherwise permitted by

statute, regulation, or order.

(5)

Regulations and Effective Date for Paragraph (2)

(A)

Regulations required. Each Federal banking agency and the National Credit

Union Administration shall, subject to paragraph (6) and after notice and

opportunity for comment, prescribe regulations that permit transactions

under paragraph (2) that are determined to be necessary and appropriate to

protect legitimate operational, transactional, risk, consumer, and other needs

(and which shall include permitting actions necessary for administrative

verification purposes), consistent with the intent of paragraph (2) to restrict

the use of medical information for inappropriate purposes.

(B)

Final regulations required. The Federal banking agencies and the National

Credit Union Administration shall issue the regulations required under

subparagraph (A) in final form before the end of the 6-month period

beginning on the date of enactment of the Fair and Accurate Credit

Transactions Act of 2003.

(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) 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.2

2 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.

July 30, 2004

(5) Any other adverse item of information, other than records of convictions of

crimes which antedates the report by more than seven years.2

(6) The name, address, and telephone number of any medical information furnisher

that has notified the agency of its status, unless-(

such name, address, and telephone number are restricted or reported using

codes that do not identify, or provide information sufficient to infer, the

specific provider or the nature of such services, products, or devices to a

person other than the consumer; or

(B)

the report is being provided to an insurance company for a purpose

relating to engaging in the business of insurance other than property and

casualty insurance.

(b) Exempted cases. The provisions of paragraphs (1) through (5) of subsection (a) of

this section are not applicable in the case of any consumer credit report to be used in

connection with

(1) a credit transaction involving, or which may reasonably be expected to involve, a

principal amount of $150,000 or more;

(2) the underwriting of life insurance involving, or which may reasonably be

expected to involve, a face amount of $150,000 or more; or

(3) the employment of any individual at an annual salary which equals, or which may

reasonably be expected to equal $75,000, or more.

(1) In general. The 7-year period referred to in paragraphs (4) and (6) 3 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

(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

3This 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.

July 30, 2004

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.

(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.

(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.

(g) Truncation of Credit Card and Debit Card Numbers

(1) In general. Except as otherwise provided in this subsection, no person that accepts

credit cards or debit cards for the transaction of business shall print more than the

last 5 digits of the card number or the expiration date upon any receipt provided

to the cardholder at the point of the sale or transaction.

(2) Limitation. This subsection shall apply only to receipts that are electronically

printed, and shall not apply to transactions in which the sole means of recording a

credit card or debit card account number is by handwriting or by an imprint or

copy of the card.

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

3 years after the date of enactment of this subsection, with respect to any cash

card or debit card transactions that is in use before January 1, 2005; and

(B)

1 year after the date of enactment of this subsection, with respect to any cash

card or debit card transactions that is first put into use on or after January 1, 2005.

(h) Notice of Discrepancy in Address

July 30, 2004

(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.

(2) Regulations

(A)

Regulations required. The Federal banking agencies, the National Credit

Union Administration, and the Commission shall jointly, with respect to

the entities that are subject to their respective enforcement authority under

section 621, prescribe regulations providing guidance regarding reasonable

policies and procedures that a user of a consumer report should employ

when such user has received a notice of discrepancy under paragraph (1).

(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-(

to form a reasonable belief that the user knows the identity of the

person to whom the consumer report pertains; and

(ii)

if the user establishes a continuing relationship with the consumer, and

the user regularly and in the ordinary course of business furnishes

information to the consumer reporting agency from which the notice of

discrepancy pertaining to the consumer was obtained, to reconcile the

address of the consumer with the consumer reporting agency by

furnishing such address to such consumer reporting agency as part of

information regularly furnished by the user for the period in which the

relationship is established.

§ 605A. Identity theft prevention; fraud alerts and active duty alerts [15 U.S.C. §1681c-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-(

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

July 30, 2004

(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-(

disclose to the consumer that the consumer may request a free copy of the

file of the consumer pursuant to section 612(d); and

(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).

(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-(

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;

(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

(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-(

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

July 30, 2004

period beginning on the date on which the fraud alert was included in the

file; and

(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).

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 requester 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

Commission 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) 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 requests that such exclusion be rescinded before the end of such

period; and

(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).

(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.

(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) paragraphs (1)(A) and (2) of subsection (a), in the case of a referral under

subsection (a)(1)(B);

(2) paragraphs (1)(A), (1)(B), and (2) of subsection (b), in the case of a referral under

subsection (b)(1)(C); and

July 30, 2004

(3) paragraphs (1) and (2) of subsection (c), in the case of a referral under subsection

(c)(3).

(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.

(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 Commission 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-

(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 establishment 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).

(B)

Limitation on Users

(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.

(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.

July 30, 2004

(2) Requirements for Extended Alerts

(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–

(i)

notification that the consumer does not authorize the establishment of

any new credit plan or extension of credit described 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

(ii)

a telephone number or other reasonable contact method designated by

the consumer.

(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 existing

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) appropriate proof of the identity of the consumer;

(2) a copy of an identity theft report;

(3) the identification of such information by the consumer; and

(4) a statement by the consumer that the information is not information relating to

any transaction by the consumer.

(b) Notification. A consumer reporting agency shall promptly notify the furnisher of

information identified by the consumer under subsection (a)-July

30, 2004

(1) that the information may be a result of identity theft;

(2) that an identity theft report has been filed;

(3) that a block has been requested under this section; and

(4) of the effective dates of the block.

(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-(

the information was blocked in error or a block was requested by the

consumer in error;

(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

(C)

the consumer obtained possession of goods, services, or money as a result

of the blocked transaction or transactions.

(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) 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.

(d) Exception for Resellers

(1) No reseller file. This section shall not apply to a consumer reporting agency, if the

consumer reporting agency-(

is a reseller;

(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

(C)

informs the consumer, by any means, that the consumer may report the

identity theft to the Commission to obtain consumer information regarding

identity theft.

July 30, 2004

(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-(

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

(B)

the consumer reporting agency is a reseller of the identified information.

(3) Notice. In carrying out its obligation under paragraph (2), the reseller 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.

(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.

(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, 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

July 30, 2004

(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.

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

July 30, 2004

(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 [15 U.S.C. § 1681e]

(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.

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

July 30, 2004

(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-(

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 [15 U.S.C. § 1681f]

Notwithstanding the provisions of section 604 [§ 1681b] of this title, a consumer

reporting agency may furnish identifying information respecting any consumer, limited to

July 30, 2004

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 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 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 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.

(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-(

the end user is an agency or department of the United States

Government that procures the report from the person for purposes of

July 30, 2004

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.

(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.

(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.

Obtain Credit Scores

(1) Commission Summary of Rights Required

(A)

In general. The Commission shall prepare a model summary of the rights

of consumers under this title.

(B)

Content of summary. The summary of rights prepared under subparagraph

(A) shall include a description of–

(i)

the right of a consumer to obtain a copy of a consumer report under

subsection (a) from each consumer reporting agency;

(ii)

the frequency and circumstances under which a consumer is entitled to

receive a consumer report without charge under section 612;

(iii)

the right of a consumer to dispute information in the file of the

consumer under section 611;

(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;

(v)

the method by which a consumer can contact, and obtain a consumer

report from, a consumer reporting agency without charge, as provided

in the regulations of the Commission prescribed under section 211(c)

of the Fair and Accurate Credit Transactions Act of 2003; and

July 30, 2004

(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 Commission prescribed under

section 612(a)(1)(C).

(C)

Availability of summary of rights. The Commission shall-(

actively publicize the availability of the summary of rights prepared

under this paragraph;

(ii)

conspicuously post on its Internet website the availability of such

summary of rights; and

(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-(

the summary of rights prepared by the Commission under paragraph (1);

(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;

(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 (or the equivalent thereof) to

learn of those rights; and

(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.

(d) Summary of Rights of Identity Theft Victims

(1) In general. The Commission, 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 respect 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 Commission

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

July 30, 2004

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, provide the consumer

with a summary of rights that contains all of the information required by the

Commission under paragraph (1), and information on how to contact the

Commission to obtain more detailed information.

(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-(

the victim;

(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-(

as proof of positive identification of the victim, at the election of the

business entity–

(i)

the presentation of a government-issued identification card;

(ii)

personally identifying information of the same type as was provided to

the business entity by the unauthorized person; or

(iii)

personally identifying information that the business entity typically

requests from new applicants or for new transactions, at the time of the

victim's request for information, including any documentation

described in clauses (i) and (ii); and

(B) as proof of a claim of identity theft, at the election of the business entity-(

a copy of a police report evidencing the claim of the victim of identity

theft; and

July 30, 2004

(ii)

a properly completed-(

copy of a standardized affidavit of identity theft developed and

made available by the Commission; 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-(

be in writing;

(B)

be mailed to an address specified by the business entity, if any; and

(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

(ii)

if known by the victim (or if readily obtainable by the victim), any

other identifying information such as an account or transaction

number.

(4) No charge to victim. Information required to be provided under paragraph (1)

shall be so provided without charge.

(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-(

this subsection does not require disclosure of the information;

(B)

after reviewing the information provided pursuant to paragraph (2), the

business entity does not have a high degree of confidence in knowing the

true identity of the individual requesting the information;

(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) Limitation on liability. Except as provided in section 621, sections 616 and 617 do

not apply to any violation of this subsection.

July 30, 2004

(7) Limitation on civil liability. No business entity may be held civilly liable under

any provision of Federal, State, or other law for disclosure, made in good faith

pursuant to this subsection.

(8) No new recordkeeping obligation. Nothing in this subsection creates 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) 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 subparagraphs (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-(

the business entity has made a reasonably diligent search of its available

business records; and

(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 statement indicating that the

July 30, 2004

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-

(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 extension of credit;

(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);

(D)

the date on which the credit score was created; and

(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” -(

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 certain 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-(

any mortgage score or rating of an automated underwriting 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

(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-July

30, 2004

(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) Applicability to credit scores developed by another person.

(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.

(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) 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) Compliance in certain cases. In complying with this subsection, a consumer

reporting agency shall-(

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

(B)

a statement indicating that the information and credit scoring model may

be different than that used by the lender.

(8) Fair and reasonable fee. A consumer reporting agency may charge a fair and

reasonable fee, as determined by the Commission, for providing the information

required under this subsection.

(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.

(g) Disclosure of Credit Scores by Certain Mortgage Lenders

July 30, 2004

(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 following to the consumer as soon as reasonably practicable:

(A)

Information Required under Subsection (f)

(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.

(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).

(B)

Disclosures in Case of Automated Underwriting System

(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.

(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 paragraph (6) of section 1303 of the

Federal Housing Enterprises Financial Safety and Soundness Act of

1992.

(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 supplied by a consumer reporting

agency.

(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

July 30, 2004

“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);

(iii)

disclose any credit score or related information obtained by the user

after a loan has closed;

(iv)

provide more than 1 disclosure per loan transaction; or

(v)

provide the disclosure required by this subsection when another person

has made the disclosure to the consumer for that loan transaction.

(F)

No Obligation for Content

(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.

(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.

July 30, 2004

(G)

Person defined as excluding enterprise. As used in this subsection, 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).

(2) Prohibition on Disclosure Clauses Null and Void

(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.

(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.

§ 610.

Conditions and form of disclosure to consumers [15 U.S.C. § 1681h]

(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;

July 30, 2004

(C)

by electronic means, if available from the agency; or

(D)

by any other reasonable means that is available from the agency.

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. 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.

(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

July 30, 2004

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 or a reseller 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 or reseller.

(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

(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.

July 30, 2004

(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.

(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)).

July 30, 2004

(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

July 30, 2004

(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.

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.

(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.

(e) Treatment of Complaints and Report to Congress

(1) In general. The Commission shall-(

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

(B)

transmit each such complaint to each consumer reporting agency involved.

(2) Exclusion. Complaints received or obtained by the Commission pursuant to its

investigative authority under the Federal Trade Commission Act shall not be

subject to paragraph (1).

July 30, 2004

(3) Agency responsibilities. Each consumer reporting agency described in section

603(p) that receives a complaint transmitted by the Commission pursuant to

paragraph (1) shall-(

review each such complaint to determine whether all legal obligations

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;

(B)

provide reports on a regular basis to the Commission regarding the

determinations of and actions taken by the consumer reporting agency, if

any, in connection with its review of such complaints; and

(C)

maintain, for a reasonable time period, records regarding the disposition of

each such complaint that is sufficient to demonstrate compliance with this

subsection.

(4) Rulemaking authority. The Commission may prescribe regulations, as appropriate

to implement this subsection.

(5) Annual report. The Commission shall submit to the Committee on Banking,

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 Commission under this subsection.'.

(f) Reinvestigation Requirement Applicable to Resellers

(1) Exemption from general reinvestigation requirement. Except as provided in paragraph

(2), a reseller shall be exempt from the requirements 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) if (i) 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 provided the reseller with the information

that is the subject of the dispute, using an address or a notification mechanism

specified by the consumer reporting agency for such notices.

July 30, 2004

(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)-(

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

(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)

(a) Free Annual Disclosure

(1) Nationwide Consumer Reporting Agencies

(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.

(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 centralized source established for such purpose in

accordance with section 211(c) of the Fair and Accurate Credit Transactions

Act of 2003.

(i)

In general. The Commission shall prescribe regulations applicable to each

consumer reporting agency described in section 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.

(ii)

Considerations. In prescribing regulations under clause (i), the

Commission shall consider–

(I)

the significant demands that may be placed on consumer reporting

agencies in providing such consumer reports;

(II)

appropriate means to ensure that consumer reporting agencies can

satisfactorily meet those demands, including the efficacy of a

system of staggering the availability to consumers of such

consumer reports; and

July 30, 2004

(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 Commission 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 Commission

under this subparagraph shall establish an effective date by which each

nationwide specialty consumer reporting agency (as defined in section

603(w)) shall be required to comply with subsection (a), which

effective date-(

shall be established after consideration of the ability of each

nationwide specialty consumer reporting agency to comply with

subsection (a); and

(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 Commission determines appropriate).

(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) 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)

Exception for first 12 months of operation. This subsection shall not apply to a

consumer reporting agency that has not been furnishing 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 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].

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

July 30, 2004

(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) 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.

(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).

(f) Reasonable Charges Allowed for Certain Disclosures

(1) In general. In the case of a request from a consumer other than a request that is

covered by any of subsections (a) through (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;4 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.

The Federal Trade Commission increased the maximum allowable charge to $9.00, effective January 1,

2002. 66 Fed. Reg. 63545 (Dec. 7, 2001).

July 30, 2004

§ 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 [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

July 30, 2004

(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].

July 30, 2004

(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.

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

July 30, 2004

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; format. A statement under paragraph

(1) shall-(

include the address and toll-free telephone number of the appropriate

notification system established under section 604(e); and

(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 Commission, by rule,

in consultation with the Federal banking agencies and the National Credit

Union Administration.

(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.

(e) Red Flag Guidelines and Regulations Required

(1) Guidelines. The Federal banking agencies, the National Credit Union

Administration, and the Commission shall jointly, with respect to the entities that

are subject to their respective enforcement authority under section 621–

(A)

establish and maintain guidelines for use by each financial institution 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;

(B)

prescribe regulations requiring each financial institution and each creditor

to establish reasonable policies and procedures for implementing the

guidelines established pursuant to subparagraph (A), to identify possible

risks to account holders or customers or to the safety and soundness of the

institution or customers; and

July 30, 2004

(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-(

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;

(ii)

notifies the cardholder of the request by such other means of communication

as the cardholder and the card issuer previously agreed to; or

(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

(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.

(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.

(f) Prohibition on Sale or Transfer of Debt Caused by Identity Theft

(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) 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).

July 30, 2004

(3) Rule of construction. Nothing in this subsection shall be construed to prohibit-(

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;

(B)

the securitization of a debt or the pledging of a portfolio of debt as

collateral in connection with a borrowing; or

(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.

(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) notify the third party that the information may be fraudulent or may be the result

of identity theft; and

(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 applicable to that person.

(h) Duties of Users in Certain Credit Transactions

(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 favorable 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) 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 application for, or grant, extension, or other

provision of, credit, except as provided in the regulations prescribed under

paragraph (6).

(3) Exceptions. No notice shall be required from a person under this subsection if–

(A)

the consumer applied for specific material terms and was granted 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

July 30, 2004

(B)

the person has provided or will provide a notice to the consumer under

subsection (a) in connection with the transaction.

(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) Content and delivery of notice. A notice under this subsection shall, at a minimum–

(A) include a statement informing the consumer that the terms offered to the

consumer are set based on information from a consumer report;

(B)

identify the consumer reporting agency furnishing the report;

(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; and

(D)

include the contact information specified by that consumer reporting 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)).

(6) Rulemaking

(A)

Rules required. The Commission and the Board shall jointly prescribe

rules.

(B)

Content. Rules required by subparagraph (A) shall address, but are not

limited to–

(i)

the form, content, time, and manner of delivery of any notice under this

subsection;

(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;

(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;

(iv)

a model notice that may be used to comply with this subsection; and

(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.

July 30, 2004

(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

(A)

No civil actions. Sections 616 and 617 shall not apply to any failure by any

person to comply with this section.

(B)

Administrative enforcement. This section shall be enforced exclusively under

section 621 by the Federal agencies and officials identified in that section.

§ 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.

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

July 30, 2004

(1) any actual damages sustained by the consumer as a result of the failure; and

(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, 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) (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

July 30, 2004 63

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.

(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 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

July 30, 2004

(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).

(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 described in any of paragraphs (1) through (3) of

section 623(c), damages for which the person would, but for section

623(c) [§ 1681s-2], be liable to such residents as a result of the violation;

(iii)

damages of not more than $1,000 for each willful or negligent violation; and

July 30, 2004

(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 Certain Violations

(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

(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 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.

July 30, 2004

(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.

(e) Regulatory authority

(1) The Federal banking agencies referred to in paragraphs (1) and (2) of subsection

(b) shall jointly prescribe such regulations as necessary to carry out the purposes

of this Act with respect to any persons identified under paragraphs (1) and (2) of

subsection (b), and the Board of Governors of the Federal Reserve System shall

have authority to prescribe regulations consistent with such joint regulations with

respect to bank holding companies and affiliates (other than depository

institutions and consumer reporting agencies) of such holding companies.

(2) The Board of the National Credit Union Administration shall prescribe such

regulations as necessary to carry out the purposes of this Act with respect to any

persons identified under paragraph (3) of subsection (b).

(f) Coordination of Consumer Complaint Investigations

(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) Model form and procedure for reporting identity theft. The Commission, in

consultation with 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.

(3) Annual summary reports. Each consumer reporting agency described in section

603(p) shall submit an annual summary report to the Commission on consumer

complaints received by the agency on identity theft or fraud alerts.

(g) FTC regulation of coding of trade names. If the Commission determines that a person

described in paragraph (9) of section 623(a) has not met the requirements of such

paragraph, the Commission 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]

July 30, 2004 67

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

[15 U.S.C. § 1681s-2]

(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 has reasonable cause to believe 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.

(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

July 30, 2004

(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)

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.

(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-(

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;

(ii)

the creditor did not previously report the date of delinquency 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

July 30, 2004

(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

(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.

(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

(A)

Notice to Consumer Required

(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.

(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.

(B)

Time of Notice

(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).

July 30, 2004

(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 notice may not be included in the

initial disclosures provided under section 127(a) of the Truth in

Lending Act.

(C)

Coordination with other disclosures-The notice required under subparagraph

(A)-(

may be included on or with any notice of default, any billing statement,

or any other materials provided to the customer; and

(ii)

must be clear and conspicuous.

(D)

Model Disclosure

(i)

Duty of board to prepare. The Board shall prescribe a brief model

disclosure 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 shall be

construed as requiring a financial institution to use any such model

form prescribed by the Board.

(iii)

Compliance using model. A financial institution shall be deemed to be

in compliance with subparagraph (A) if the financial institution uses

any such model form prescribed by the Board, or the financial

institution uses any such model form and rearranges its format.

(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.

(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.

(G)

Definitions. For purposes of this paragraph, the following definitions shall apply:

(i)

The term “negative information” means information concerning a customer's

delinquencies, late payments, insolvency, or any form of default.

(ii)

The terms “customer” and “financial institution” have the same meanings as

in section 509 Public Law 106-102.

July 30, 2004

(8) Ability of Consumer to Dispute Information Directly with Furnisher

(A)

In general. The Federal banking agencies, the National Credit Union Administration,

and the Commission shall jointly 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.

(B)

Considerations. In prescribing regulations under subparagraph (A), the

agencies shall weigh-(

the benefits to consumers with the costs on furnishers and the credit

reporting system;

(ii)

the impact on the overall accuracy and integrity of consumer reports of

any such requirements;

(iii)

whether direct contact by the consumer with the furnisher would likely

result in the most expeditious resolution of any such dispute; and

(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).

(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-(

identifies the specific information that is being disputed;

(ii)

explains the basis for the dispute; and

(iii)

includes all supporting documentation required by the furnisher to

substantiate the basis of the dispute.

(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-(

conduct an investigation with respect to the disputed information;

(ii)

review all relevant information provided by the consumer with the notice;

July 30, 2004

(iii)

complete such person's investigation of the dispute and report 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.

(F) Frivolous or Irrelevant Dispute

(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-(

by reason of the failure of a consumer to provide sufficient

information to investigate the disputed information; or

(II)

the submission by a consumer of a dispute that is substantially the

same as a dispute previously submitted 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.

(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 determination, 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-(

the reasons for the determination under clause (i); 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.

(G)

Exclusion of credit repair organizations. This paragraph shall not apply if

the notice of the dispute is submitted by, is prepared 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).

July 30, 2004

(9) Duty to provide notice of status as medical information furnisher. A person whose

primary business is providing medical services, products, 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

(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;

(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

(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–

(i)

modify that item of information;

(ii)

delete that item of information; or

(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.

617 do not apply to any violation of-(

1) subsection (a) of this section, including any regulations issued thereunder;

(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

July 30, 2004

(3) subsection (e) of section 615.

(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.

(e) Accuracy Guidelines and Regulations Required

(1) Guidelines. The Federal banking agencies, the National Credit Union

Administration, and the Commission shall, with respect to the entities that are

subject to their respective enforcement authority under section 621, and in

coordination as described in paragraph (2)-(

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

(B)

prescribe regulations requiring each person that furnishes information to a

consumer reporting agency to establish reasonable policies and procedures

for implementing the guidelines established pursuant to subparagraph (A).

(2) Coordination. Each agency required to prescribe regulations under paragraph (1)

shall consult and coordinate with each other such agency so that, to the extent

possible, the regulations prescribed by each such entity are consistent and

comparable with the regulations prescribed by each other such agency.

(3) Criteria. 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 can

compromise the accuracy and integrity of information furnished to

consumer reporting agencies;

(B)

review the methods (including technological means) used to furnish

information relating to consumers to consumer reporting agencies;

(C)

determine whether persons that furnish information to consumer reporting

agencies maintain and enforce policies to assure the accuracy and integrity

of information furnished to consumer reporting agencies; and

(D)

examine the policies and processes that persons that furnish information to

consumer reporting agencies employ to conduct reinvestigations and

correct inaccurate information relating to consumers that has been

furnished to consumer reporting agencies.

July 30, 2004

§ 624. 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-(

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

(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 allow 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

(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.

(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 paragraph (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–

July 30, 2004

(A)

using information to make a solicitation for marketing purposes to a

consumer with whom the person has a pre-existing business relationship;

(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;

(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);

(D)

using information in response to a communication initiated by the

consumer;

(E)

using information in response to solicitations authorized or requested by

the consumer; or

(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.

(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 described in subsection (a) to a consumer together

with disclosures required by any other provision of law, shall satisfy the requirements

of subsection (a).

received from another person related to it by common ownership 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).

July 30, 2004

(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-(

a financial contract between a person and a consumer which is in force;

(B)

the purchase, rental, or lease by the consumer of that person's goods or

services, or a financial transaction (including holding 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;

(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.

(2) 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 public or determined not to be a solicitation by the

regulations prescribed under this section.

§ 625.

Relation to State laws [15 U.S.C. § 1681t]

(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.

(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;

July 30, 2004

(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;

(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);

(G)

section 609(e), relating to information available to victims under section

609(e);

(H)

section 624, relating to the exchange and use of information to make a

solicitation for marketing purposes; or

(I)

section 615(h), relating to the duties of users of consumer reports to

provide notice with respect to terms in certain credit transactions;

(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);

July 30, 2004

(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-(

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);

(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

(C)

shall not be construed as limiting, annulling, affecting, or superseding any

provision of the laws of any State regulating the use in an insurance

activity, or regulating disclosures concerning such use, of a credit-based

insurance score of a consumer by any person engaged in the business of

insurance;

(4) with respect to the frequency of any disclosure under section 612(a), except that

this paragraph shall not apply–

(A)

with respect to section 12-14.3-105(1)(d) of the Colorado Revised Statutes

(as in effect on the date of enactment of the Fair and Accurate Credit

Transactions Act of 2003);

(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);

(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);

(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);

(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);

(F)

with respect to section 56:11-37.10(a)(1) of the New Jersey Revised

Statutes (as in effect on the date of enactment of the Fair and Accurate

Credit Transactions Act of 2003); or

July 30, 2004

(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) with respect to the conduct required by the specific provisions of-(

A) section 605(g);

(B) section 605A;

(D) section 609(a)(1)(A);

(E) section 612(a);

(F) subsections (e), (f), and (g) of section 615;

(G) section 621(f);

(H) section 623(a)(6); or

(I) section 628.

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 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 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

July 30, 2004

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

amendment to the Constitution 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 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.

[§ 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

ex parte 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. 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.

July 30, 2004 82

(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

July 30, 2004

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.

§ 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 counterintelligence 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.

(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.

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).

(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.

(e) Safe harbor. Notwithstanding any other provision of this title, any consumer reporting

agency or agent or employee thereof making disclosure of consumer reports or

other information pursuant to this section in good-faith reliance upon a certification

July 30, 2004

of a governmental 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.

§ 628. Disposal of records [15 U.S.C. §1681w]

(a) Regulations

(1) In general. Not later than 1 year after the date of enactment of this section, the

Federal banking agencies, the National Credit Union Administration, and the

Commission with respect to the entities that are subject to their respective

enforcement authority under section 621, and the Securities and Exchange

Commission, 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) Coordination. Each agency required to prescribe regulations under paragraph (1)

shall–

(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

(B)

ensure that such regulations are consistent with the requirements and

regulations issued pursuant to Public Law 106-102 and other provisions of

Federal law.

(3) Exemption authority. In issuing regulations under this section, the Federal banking

agencies, the National Credit Union Administration, the Commission, and the

Securities and Exchange Commission 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-(

1) to require a person to maintain or destroy any record pertaining to a consumer

that is not imposed under other law; or

(2) to alter or affect any requirement imposed under any other provision of law to

maintain or destroy such a record.

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

The Commission 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

July 30, 2004

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

(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).

60 Minutes Torches Experian, Equifax, and Transunion

David Traywick — Tue, 12 Feb 2013 16:06:00 GMT

As news from the February 10th 60 Minutes piece generates headlines across the country, we at Traywick Law Offices ask: "How can this be a surprise to anyone?" That the credit bureaus--Experian, TransUnion, Equifax--carry countless mistakes on their books has been obvious to us for years: we find these mistakes for TLO clients on a regular basis. We also know that state and federal law provide powerful tools to consumers in South Carolina which empower people hurt by these very powerful corporations, with whom most people never have transacted any business.

As 60 Minutes points out, the credit bureaus like to blame the banks, credit card companies and other corporations for making erroneous reports about the public's creditworthiness. The truth, though, is that when you are denied a loan for a car, or when the seller agrees to finance you but at a much higher interest rate than is rightfully yours, the decision is made largely by reference to your credit report, which is provided by Experian, Equifax or TransUnion. When a bank refuses a mortgage loan, that person's credit bureau report was one of the first things the bank considered.

As we wrote in a recent blog post, an adverse credit score puts the person subject to it in a highly disadvantageous financial situation. He or she is no longer on a level playing field with folks who enjoy a high credit score. In fairness, it is true that there is shared responsibility here: credit bureaus who are provided false information by a bank or credit card company certainly are in a difficult position. Regardless, though, given how important the credit score is to individuals, one would think the credit bureaus would take their responsibility to keep their reports accurate very seriously.

As America saw on 60 Minutes, that appears not to be the case: multiple year fights to fix errors are commonplace, red tape is endless. Not surprisingly, the credit bureaus declined to appear on the program to explain themselves. The truth is this: credit bureaus' bottom lines are not helped by spending money and time in receiving, considering and acting on consumers' complaints that their credit reports are inaccurate. So the tools available to dispute information reported erroneously are inadequate and consumers are forced, basically, to turn credit report disputes over to an attorney with experience handling Fair Credit Reporting Act claims. Credit bureaus make money by providing credit reports to lenders for a fee. They make no money by investigating erroneous reporting; these investigations, so important to consumers, are an unwanted hassle to credit bureaus, a waste of time and money, lost profit.

And it is for precisely these reasons that every American has a right--granted by the federal government--to secure his or her credit report once per year. From this report you can learn what credit bureaus are reporting about you, and you can verify--line by line, item by item--whether their reporting is accurate. Considering that 60 Minutes reported that one in five credit reports contains errors, and that one in ten contains an error that may affect the person's credit score--one story on the program involved a South Carolina man whose credit report contained a mortgage foreclosure that was not his!--TLO highly recommends that each person check his credit score annually.

If you believe the credit bureaus have on their books or are reporting inaccurate information about you to lenders, call us to learn about the tools the law provides to ensure fair treatment by, and just compensation against, the credit bureaus and the financial institutions who provide information to them.

Credit Report Errors and Credit Reporting Violations

David Traywick — Fri, 09 Nov 2012 23:40:00 GMT

Suppose you are buying a car or you are trying to get a mortgage on a piece of property. Both are situations in which a consumer's credit score is crucial to the transaction. Your credit record will determine two things: first, whether you are approved for the purchase or lease in the first place and, second, what the terms of the loan / lease will be in the event you do get approved.

If a consumer walks into a car dealership, selects a vehicle he wants and then tries to borrow money for the transaction, the car dealership will check his credit report. Consider what happens with two consumers: Consumer A has a credit score of 800 and 10,000 dollars to put down on the vehicle. Consumer B has a 600 credit score and only 1000 dollars to put down on the vehicle. Let's suppose further that both consumers actually prefer to lease the vehicle as opposed to buy the vehicle. In the case of Consumer A, he will be allowed to lease, but Consumer B will not. This is because a car company will only lease its vehicle to people who pose a very low credit risk. So right away, Consumer B walks onto the car lot with limited options because his credit score is low.

But suppose Consumer A and B wish to purchase the vehicle. Consumer A will be told that he qualifies for a 1.9% interest rate over 60 months and doesn't need to put any money down. His payment will be 400 dollars. Consumer B wishes to purchase the same vehicle, but will be told that he has to put 3000 dollars down and will have to pay 460 dollars over 60 months.

Why the difference? Creditworthiness. Consumer B's interest rate will not be competitive. Consequently, he pays a price for his poor credit score.

It is easy to imagine a similar outcome in the mortgage context.

Often, Traywick Law Offices fields telephone calls from customers right after they tried to make a substantial purchase, frequently a car or a piece of property, and have been told by the lender either that they do not qualify, or are offered terms that are unacceptable, all because a major negative item or items appear in the consumer's credit report.

Sometimes, the consumer is denied credit because of a debt that he does not owe but that appears on his credit report. The wrongfully reported credit information can appear there for a number of reasons: 1) identity theft; 2) divorce; 3) mistake; 4) misunderstanding, and a host of other reasons.

If your credit report has been damaged because someone has placed a negative item on your credit score that does not belong there, you do have a very powerful legal remedy - the Fair Credit Reporting Act.

Credit scores and credit reports are important. When consumers are denied credit, or are forced to pay higher interest rates owing to information being reported on a credit bureau report ,such as experian, equifax, or transunion reports, that is erroneous or otherwise does not belong there, the consumer has been damaged.

Fortunately, Traywick Law Offices deals with this kind of situation, and you can be compensated, sometimes significantly, for the damage done to your credit score as a result of the disputed credit information or 'trade-line'.

Although the Fair Credit Reporting Act is complicated, Traywick Law Offices is familiar with the Act and has successfully brought civil actions to enforce consumers' rights. Recoveries for damages in cases like these can be considerable and you should telephone Traywick Law Offices to speak with the lawyer right away to see about what can be done.

If you have discovered a negative credit item on your credit report or seen a credit report that has collection accounts, delinquent accounts, or public records reported that are incorrect, you have legal rights available and the recovery may be substantial.

But do not try to handle the case on your own without a knowledgeable consumer credit dispute attorney assisting you. Call today to discuss your case.

Strategic Default on Second Mortgage: The Bank's Perspective

David Traywick — Sat, 21 Jul 2012 19:35:00 GMT

If you own an investment property financed by Bank of America or serviced by Bank of America, you may be in luck if the property is now underwater, worth less than what is owed, or otherwise distressed. This may be true particularly where the investment property has a second mortgage, all or part of which exceeds the value of the property.

Where a second mortgage secures an amount of debt that exceeds the value of a property, that second mortgage can be referred to as underwater or unsecured.

What a mortgagor (the party who grants a mortgage on real property as security for a debt owed) must understand is that mortgagees (the party who holds the security interest, ie: the bank) value their loans based on a variety of factors one of which is whether or not the loan is secured by the actual value of the underlying real property.

If a mortgagee in second position (the mortgage holder has a second mortgage) has loaned 100,000 dollars on a Myrtle Beach condo, if the mortgagee in first position is owed 250,000 dollars on property having an actual value of 260,000 dollars, the second mortgage holder will consider its 100,000 loan unsecured or underwater. In the scenario set forth, even though the property is nominally worth 260,000 dollars, the second mortgagee must account for the costs of actually having the property sold: for example, there will be carrying costs associated with temporary ownership of the property (regime payments since it is a condo, tax payments, insurance payments, maintainenace, etc) and then there will be the transaction costs commonly associated with an actual sale (liquidation of the security), the most important of which are real estate commissions, typically 6% of the sales price. In this example, if the debtor stops making payments to the second mortgagee (let us assume it is Bank of America that is owed the 100,000 dollars on the second mortgage or HELOC) will be forced to choose between the following options:

BANK OF AMERICA'S POINT OF VIEW AND OPTIONS

1. Sue for foreclosure and have the property sold at auction. The option is not good for Bank of America given the facts here because investors that show up to bid at auctions are bottom feeders and will bid anywhere from 15-20% less than the property's fair market value (FMV). Consequently, if the property sells to a third party purchaser at auction it will sell for between 210,000 and 235,000 dollars (15-20% discount from FMV). If the first mortgage holder purchases the property in order to avoid giving it away for much less than FMV, the first mortgage holder (lets assume it is Wells Fargo in this case) is certain to bid only up to the amount it is actually owed, in this scenario it is owed 250,000 dollars. In either case then, Bank of America will not receive a single dollar as a result of the auction because the first 250,000 dollars of auction proceeds will go straight to Wells Fargo, the first mortgage holder. If Bank of America bids on the property, it will have to outbid the first mortgage holder who will be up to the amount it is owed, consequently, Bank of America will have to bid more than 250,000 dollars to win the auction, which means Bank of America ends up buying an asset that is guaranteed to be sold at a loss. Bank of America, consequently, would never bid on the property at a foreclosure auction given the circumstances set forth here.

2. Sue the debtor personally and hope he has assets that can be liend or agrees to pay the amount owed under threat of suit. The problem facing Bank of America with this option is that most people do not have 100,000 dollars lying around in a bank account. This means Bank of America will have to go to extensive lengths to get paid, even if it sues the debtor and gets a judgment. Some of its options will be special proceedings to levy bank accounts or executing on real or personal property, or, it may try to garnish wages (however, not in South Carolina, a non-garnishment state). Whatever the case, in this option Bank of America will be forced to retain attorneys to initiate the lawsuit, and the debtor will have an opportunity to defend himself. Lawsuits usually take at least a year to resolve, and frequently take longer than that. During this period, Bank of America is spending money without any certainty of ever getting a nickel from the debtor. For certain the debt would be dischargeable in a bankruptcy filing. The discharge via bankruptcy possibility by itself reduces the value of the debt and renders the attractiveness of option 2 marginal in most cases. As a result of a variety of factors, uncertainty means Bank of America may be throwing good money after bad, something its bean counters don't like to do. Consequently, Bank of America will not consider suing the debtor directly and hoping it can find assets or force the debtor to settle a very good option - it is time consuming, expensive and uncertain, any one of which on its own is a deterent from Bank of America's point of view. Consequently, Bank of America will undertake option 2 as a last resort.

3. Assign or sell debt to debt collection company. This is the preferred method for Bank of America in this scenario. It has the advantage of being quick and producing immediate income. Of course, Bank of America will not be able to sell the debt for anywhere near the amount actually owed. Typically, the debt will be sold for a sum derived from a variety of factors, in a nutshell, the debt buyer will estimate how much it can reasonably expect to recover from the debtor and then pay some fraction of the estimated amount. These factors are not difficult to figure out: whether the debt is partially secured, whether the debtors estimated income/assets/ make it likely the collector will get paid, etc. In any case, Bank of America will sell the debt to a junk debt buyer for between 2 cents and 40 cents on the dollar. The range can vary widely. But rest assured, the debt buyers and collection agencies are very sophisticated. Algorithms exist that can estimate within a relatively accurate range the amount a collector / debt buyer might actually recover over time. The more information known about the debtor, the more accurate the estimate will be. Bank of America will most likely prefer option three in the scenario because it provides certainty and clarity, something the bean counters running Bank of America crave. Bank of America doesn't like taking a big loss on the loan, but the burden of carrying non-performing assets is considerable and in the end, Bank of America doesn't really have any good options, so it takes the least costly option that provides the most certainty.

4. Settle the debt directly with the debtor for less than the amount owed. This is the clear preference of both Bank of America and the debtor in the scenario thus far presented. Suppose the debtor in this case offers Bank of America 15,000 dollars cash as settlement in full on the 100,000 dollar debt. Bank of America has a difficult decision to make, but as has been illustrated, as low as the offer is, it may be better than any other option Bank of America has available to it. Let's consider this from the Bank's point of view: the bank will analyze the 15k offer by measuring it against options 2 and 3 above. Option 2 is desirable only if the bank has a very high level of confidence that the debtor will pay more than 15,000 dollars if Bank of America obtains a judgment against him. Typically, that won't be the case unless the debtor has property that can be liend and executed upon or better yet a more liquid asset such as a bank account with a lot of money it in that can be seized or if the debtor has a high income that can be garnished. This is seldom the case, and even where it is the case, such debtors are the sort most likely to retain counsel to defend them from bank in court. If the debtor retains a lawyer to defend the lawsuit, the Bank has just created another huge headache for itself and guaranteed that there will be no resolution to the outstanding debt soon - compared to option 2, a one time immediate payment of 15,000 dollars starts to look increasingly favorable. Next, Bank of America will consider where it ends up if it resorts to option 3. Comparatively, Bank of America will likely conclude that option 4, the 15,000 settlement offer, is fairly attractive. Consider that most junk debt buyers pay 2-20 cents per dollar of debt acquired. Twenty cents on the dollar would be fantastically rare and would only apply to certain categories of debt and within those categories in only certain circumstances - essentially where the same factors that might make option 2 look attractive: namely, a high level of certainty that the debtor has resources and also wishes to avoid a judgment. In those rare cases, the debt buyers might consider paying a big premium for a non-performing, unsecured asset. If those circumstances are present, Bank of America must still measure all of the costs/risks against a quick settlement for 15,000 dollars. Whatever the case, Bank of America will give strong consideration to settling the debt directly with the debtor.

Bottom line: Bank of America is not in the business of collecting on unsecured debt. To the extent it wants unsecured debt, it wants that debt floating at an interest rate that more accurately reflects the risks associated therewith: ie: at credit card rates. Second mortgages were written at very low rates, rendering the loans incredibly undesireable assets to have lying around, particularly when they aren't performing and especially when they are unsecured and in default.

Consequently, property owners with second mortgages that are underwater or unsecured have a fairly strong position vis a vis their bankers. Traywick Law Offices has successfully settled second mortgages for fractions of the amounts owed, settlements which have made investment properties that had lost value look significantly less horrible and settlements which have enabled clients to afford to live in properties that were unaffordable in the context of underwater second mortgages or HELOCs.

If you have property that is underwater, particularly where a second mortgage represents all or most of the negative equity, consult with Traywick Law Offices to discuss your options today.

Timing Credit Negotations and Credit Card Lawsuits

David Traywick — Sat, 21 Jul 2012 18:59:00 GMT

FIA Card Services and Discover Bank are suing South Carolina residents left and right on charged off credit card debt. Two law firms are very active representing both companies against South Carolina residents: Dillon Law Firm and Smith Debnam Saintsing and Myers.

Both firms present as if they represent the original creditors. It is unclear whether they do or whether they are debt buyers. However, whatever the case may be, it is essential to defend these cases and to attempt settling the cases prior to judgment.

Typically, both law firms seek 50% of the balance claimed to be owed and won't consider settling for less than that. This is a bad settlement and defendants should utilize aggressive litigation tactics in order to pressure plaintiffs to settle for more advantageous sums.

The fact is, if a credit card account has been turned over to a law firm and a suit filed, the debtor has waited too long before trying to deal with the debt. Traywick Law Offices can typically negotiate credit card accounts pre-charge off or pre-suit down to 33% of the debt claimed to be owed - and sometimes less.

Consequently, you should not wait for a lawsuit hoping that the creditor will go away or fail to protect its legal rights - such as by waiting too long (and missing the statute of limitations) to sue on the debt. If the account gets to a law firm, it will cost the debtor significantly more to resolve the dispute than if the debtor deals with the account prior to a suit being filed.

The best scenario for the debtor is to contact Traywick Law Offices prior to stopping payments. We see clients with tends of thousands of dollars of credit card debt that are positively drowning because of it. They struggle to keep up on payments because they want to do the right thing, but become frustrated because they don't see themselves making any progress on paying down the balances. Strategic default may be an option for dealing with excessive credit card debt, even if the defaulting party (debtor) owns assets she wishes to preserve.

Illustration: suppose you had 5 credit cards with an average balance of 8 thousand dollars on each. Suppose also that the average interest rate on each card is 15% (a generous rate for a credit card). The debtor in this scenario has 40,000 dollars in debt at 15% interest per year. To determine, roughly, how much this debtor pays in interest each month, first determine the amount of total interest paid over the course of an entire year: ($40k * .15) = 6000 dollars interest per year. Next, divide the total yearly interest by the number of yearly intsallments (12 installments, one each month), and that number equals the monthly interest due = $6000 yearly interest / 12 installments = 500 dollars interest / month. In the illustration then, the debtor pays 500 dollars each month in interest alone each month. 500 dollars is a huge amount of money to pay each month for interest on credit card debt. If one assumes a debtor must earn 650 dollars in gross income in order to pay 500 after tax dollars in interest, one can quickly conclude that 40,000 dollars in credit card debt is totally unsustainable for any middle class person. Unless you have a six figure income, 40,000 dollars in credit card debt is far beyond your means ever to repay, even if you are able to keep your head above water for a period of time, the moment you encounter any unexpected disruption, such as illness, temporary loss of income, loss of a job, or an unavoidable expense that takes precedence over credit card debt, such as doctors visits, a vehicle repair, maintenance on real property, or whatever, a middle class earner is better off not paying the debt at all. The credit hit already hurts this particular debtor anyway, since 40,000 dollars of unsecured debt at a high interest rate renders a middle income earner uncreditworthy. Folks might as well face facts: in the above scenario, any money paid in an attempt to satisfy the debt is wasted money. The numbers speak for themselves, in the illustration, the middle class earner simply will not be able to repay the amount owed. In this illustration, the debtor would be far better off defaulting on the debt and working with Traywick Law Offices on a plan that resolves the debts over a 12-24 month period. At least that way the debtor gets out of debt slavery and doesn't throw money away on exhorbitant interest payments.

People in over their heads that have stopped paying on a credit card or other installment account/contract shouldcontact a credit negotiation attorney at Traywick Law Offices right away. You might be surprised at the deal your original creditor might offer you.

Too Much Credit Card Debt? Start Here And Avoid Bankruptcy

David Traywick — Sun, 22 Apr 2012 01:19:00 GMT

This law practice talks to many people about their financial situation. Frequently, those consultations involve folks who have borrowed too much money, primarily credit card debt, and can no longer, for various reasons, afford to repay that debt.

The explanations are myrida - frequently, a job loss is involved. Others contract an illness, or have an accident, or start a business that fails (most do as you know). And other times, people just look down the road and realize they will never repay the money unless they win the lottery and decide, to hell with it, IM NOT PAYING ANYMORE.

The question in all cases is - what now? If you read up around this blog, you will realize that there are many alternatives to bankruptcy - debt negotiation and strategic defaults are the preferred tools. This law practice knows how deploy all of the best tactics to get you permanent debt relief.

Will it be easy for you? No, it will not be. It invariably involves your credit being destroyed for a period of time and absolutely requires that you discipline yourself each and every month in order to get yourself free of debt slavery. But without exception, let me repeat that, WITHOUT EXCEPTION, clients simply cannot believe that the world I show to them even existed. By the time they are out of the woods after working the plan we design together, they would never dream of going back to the world of credit slavery.

It's simple folks. If you've gotten yourself in too deep, contact us today. Let us help you breath again. You might be amazed at what can be accomplished working together with us. We can help you get free of credit card debt, mortgage debt, sometimes even protecting other assets, and we can do it in a year or two years rather than six years like a Chapter 13 plan, and can do it often without your having to give up on assets that you want to keep like you will have to do in a Chapter 7 filing.

Credit Negotiation Attorney Having Outstanding Success Hammering Underwater Second Mortgages

David Traywick — Wed, 28 Mar 2012 03:11:00 GMT

The office has been absolutely pummeling Citimortgage and Bank of America on second mortgages those institutions foolishly extended on properties that are now underwater.

Essentially, the office has settled three consecutive second mortgages, two held by Citimortgage and one held by Bank of America for literally ten cents on the dollar. How much work was involved? Plenty. All three occassions this office engaged in rather tedious and lengthy negotiations, threats of lawsuits, and other tactics to force these underwater second mortgagees to settle their claims for a fraction of what the clients owed.

If you have a second mortgage that you aren't paying you might want to consider retaining the credit negotiation and foreclosure defense lawyer to assist you in getting the best settlement deal you can possibly get.

Many figure bankruptcy is the best option. Sometimes, but this office has a philosophy: if bankruptcy can be avoided, it ought to be, even when it costs more to do so. In many ways, bankruptcy is the lazy way out. Bankruptcy will be a black eye on any credit application or job application you ever fill out. You will have to admit forever that you declared bankruptcy - not exactly a pleasant thing to have to admit. Don't misunderstand, a bankruptcy filing under chapter 7 or chapter 13 makes sense plenty of times and for plenty of clients, but in other situations this office counsels against it, all other things being equal and even if things are a little bit less than equal. Bankruptcy should be a last resort.

Traywick Law Offices looks for every solution before ever suggesting that a bankruptcy is sensible.

One piece of advice this office gives for free is this: if you have to choose between paying your first mortgage and paying your second mortgage, always pay your first. For some reason, we encounter more than a few people, including clients, who come to us current on their second mortgage and behind on the first. That makes absolutely no sense. The second mortgage holder, in many circumstances, won't foreclose on the property whereas the first one always ALWAYS will.

If you are looking for a way out of a financial mess, contact us today. A consultation is always free.

Use an Attorney to Secure a Loan Modification

David Traywick — Wed, 28 Mar 2012 02:52:00 GMT

These offices will not try to mislead anyone into thinking getting a loan modification is a sure thing or even probable, but when you need one or you lose your property, you should retain local counsel in order to ensure you have the best probability of achieving loan modification success.

The banks, servicers and the federal government have created an alphabet soup of loan modiication programs. This is true because some loans are backed, owned, or guaranteed by Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac. Such FHA loans have their own program underwritten by federal dollars with strict guidelines as to who does and does not qualify. Privately owned loans, any private label securitization trust, or a loan actually helf for investment by your lender, are not subject to any of the provisions of federal rules. The government cannot force a private party to modify your loan if the private party does not want to.

What this means in practice is this: unless Fannie or Freddie owns your loan, your lender doesn't need to provide you any reason for denying a modification. If fannie or Freddie does own your loan, you at least are entitled to an explanation for why your loan modification application was turned down.

If you are interested in finding out what the federal guidelines are, good luck finding them on the internet or on a government website. They aren't easy to find, and they are positively Byzantine to try to understand even if you do find them and are masochistic enough to want to read them.

But never fear because Traywick Law Offices and the Loan Modification attorney has read them . . . and you can hire us to do all the dirty work. Can these offices promise your loan modification application will be approved? Not in the slightest. But we do promise that our offices will give you as good a chance as anyone else and we will very likely give you a better chance at it than you could going it alone.

We have experience putting together clean applications. We send them complete and we send them complete the first time. Additionally, we document everything we do, who we speak to, and when. This way, there is never any 'lost paperwork' or the need to duplicate efforts.

Essentially, we know the ropes and we know the tricks. We can force your loan servicer to consider a clean application and then furnish its reasoning for denying the loan modification. If we suspect your lender or servicer has refused to act in good faith in considering loss mitigation efforts, well, our great State of South Carolina has furnished a remedy and we know how to leverage those as well.

If you are tired of being told 100 different things by 100 different people when all you want is your loan modified, contact a local foreclosure defense and loan modification attorney today.

Mortgage Loans in the Land of Oz: Who Owns Your's?

David Traywick — Sun, 19 Feb 2012 22:50:00 GMT

YOUR LOAN AS A CONTRACT

In any contract, and your mortgage is a contract, there are at least two parties. Parties to a contract offer what is known as 'consideration' in support of the other party's obligation with respect to the agreement. In a mortgage contract, a lender provides money as consideration for your promise to repay that money plus interest.

Actually, the contract is the promissory note, which was your promise to repay money borrowed from the lender plus interest. The mortgage itself is simply collateral pledged by you to secure that promise to pay.

In short, you get cash and promise to pay the cash back. You buy property with that cash and offer that house as collateral in support of your repayment promise. That is what a mortgage contract is in theory.

CONTRACT RIGHTS AS ASSETS TO BE BOUGHT AND SOLD

In practice, banks bought and sold your promise and its attendant security like banks buy and sell any other asset they invest in - as if they were pork bellies or shares of IBM stock. Your promise to pay was valued on a market, and bought and sold perhaps many times. While the music was playing nobody was paying too much attention to whether their 'ownership' of the loan could be easily established or whether their 'ownership' of their loans were well documented - because nobody ever intended to hold onto them long term. Every loan that was bought was going to be sold at one time or another and thereby paperwork problems were to become someone else's problems in short order - and while the music was still playing nobody cared about what was going to happen when it stopped.

Well, the music has stopped.

So the banks had all these troubled loans that weren't performing, that they couldn't sell, and that were supposedly 'secured' by real property - so they decided to go get their collateral. Dammit, these banks had bought these assets in good faith and they weren't going to take the losses if they could find a way not to - to hell with the fact that the loans had been bought and sold more times than a Vegas hooker and were about as well-documented as Barak Obama's birth certificate (horrible joke, but it works).

At any rate, we all know what happened next - fabricated affidavits and chains of ownership manufactured out of whole cloth - fraud - the kind of fraud South Carolina's attorney general just settled with the big loan servicers for a few miserable dollars.

WHO OWNS YOUR LOAN?

Now of course, the fact that your loan was bought and sold was unknown to you - but it ought to have been. After all, doesn't it seem logical to know who you owe money to? That is why this blog post begins by discussing that there are two parties to every contract. The problem in the mortgage context is this: nobody knows who they actually owe money to. Some loan servicer comes along and says, hey, you owe this cabbage. You know you owe money to someone and so you pay the person demanding that you pay - Wells Fargo, Bank of America, Chase, CitiMortgage, GMAC, and a host of other loan servicers around the country.

And yet, we know for a fact that 40% of all mortgages are owned or securitized by Fannie Mae and Freddy Mac, the wholly owned subsidiaries of the United States Treasury Department. How can this be? How can half of the country owe money to Fannie or Freddy and yet never see a bill or statement from either?

Simple - those companies (foolishly) contract with Bank of America, Citimortgage, GMAC, Wells Fargo, Chase and others to 'service' the loans that Fannie and Freddy own or securitized. If you want to know whether Fannie or Freddie owns your loan go to their loan lookup tools: Fannie and Freddie.

Now, many people were aware that their loans were being serviced by new companies. You would be notified via letter and possibly over the phone that your loan is no longer being serviced by GMAC and that some outfit calling itself Generic Mortgage Servicing is now handling the servicing of 'your' loan.

But what is interesting is that nobody ever knew that the person they actually owed money to was changing over and over and over again. Thus a client last week asked me whether her actual lender was really The Wizard of Oz. I responded, why, yes, basically, your lender is basically the Wizard of Oz of the lending world. Her loan servicer, Chase, had kept refering to an 'investor' whenever she called to talk about a modification or a short sale. This unnamed investor was always making all the important decisions: the loan servicer submited her loan modification documents and short sale contracts and the loan servicer couldn't do anything without talking to the 'investor' first. Even the law firm handling the forelosure against her had to go through the loan servicer to get any answers from the 'investor'.

It's all really quite ridiculous. The reason it is so difficult to get an answer about a modification or short sale is that before information ever gets to the decision maker it has passed through the hands of two, three or even more agents.

In the real Oz, the Wizard was this small rather ridiculous man . . . he was quite ordinary. You might discover that your lender - the big bad all powerful investor you keep hearing so much about - is actually some skinny, wimpy dude sitting in a crappy office suite in New Jersey or San Francisco; or is in point of fact a predatory hedge fund with absolutely no proof it owns your loan; or is in fact holding very few cards worth playing and is trying to bluff you into defaulting on a lawsuit or into short selling your house and paying him all the proceeds of the sale and thereby solving all of his paperwork problems.

Our philosphy is to pull the curtain back and really scrutinize the man standing behind it.

Real Estate Agent Clowns

David Traywick — Sun, 19 Feb 2012 19:34:00 GMT

Your real estate agent can be relied upon to do one thing and one thing only: push aggressively for a short sale of your property. Sometimes that is good but many times a short sale is not in your interest or can even be harmful to your interests, both legal and economic.

A real estate has a conflict of interest and his advice should not be trusted - why? Because, a real estate agent only gets paid if he sells your property.

Relying on a real estate broker, real estate agent, or short sale agent or short sale transaction to resolve your difficulty with an underwater mortgage, much less with a lawsuit (when you are handed a lis pendens, summons, and complaint), is probably not a smart move at all. A real estate agent will work hard to get a sale done that is true, and they are jumping through ridiculous hoops in order to facilitate sales - but he will confine himself to that and he isn't going to lift a finger in pursuit of any other possible outcome, when in fact there are other possibilities.

When you are trying to walk away from a property or when you are behind on your payments, you are looking at one of two situations:

1. You cannot continue making payments (distressed); or

2. You do not wish to make payments though you could afford to (strategic).

In the first scenario, the borrower almost always lives in the property. In that situation, why would you take any action that leads to an outcome that hastens the approach of the date when you must vacate the property? Why would you voluntarily sell your property when you realize an economic benefit of not doing so (ie: living in the property)? Often, real estate agents convince borrowers that somehow a short sale is better than a foreclosure appearing on your credit report. That is absolute nonsense. By the time a borrower is signifcantly behind on payments, particularly a primary residence mortgage payment, the borrower's credit score is so thoroughly undermined that the effect of a shortsale improves the borrower's creditworthiness in the eyes of potential future lenders to the same degree that a bit of cologne improves the smell in the elephant pen at the zoo - ie: not at all.

If you are going to lose your primary residence because of inability to pay, whether it be via short-sale or actual foreclosure, you can forget about a private loan for years to come. Perhaps Fannie and Freddy will lend you money again prior to the negative items disappearing from your credit report (7 years) but that will be the case whether the outcome was an actual foreclosure or a short-sale.

There is no sense putting lipstick on a pig - if you are losing your house over inability to pay, you should realize the economic benefit of remaining in that house as long as possible, that means defending the foreclosure suit, not worrying about helping the bank by arranging a shortsale.

I've seen folks working on short sales with agents when the bank is waiving deficiency judgment and there is no second mortgage - that is absolutely foolish. Only if a bank seeks a deficiency judgment should a short sale even be contemplated. Short sales are incredibly difficult and time consuming transactions: for buyer, seller, bank and agents. The owner will be asked to provide an enormous amount of information in 'exchange' for the bank considering approving one. When a bank has waived its right to a deficiency judgment there is absolutely no economic benefit to the homeowner of agreeing to one - in fact, a homeowner damages his interests by not staying in the home as long as he can - and that means defending the suit.

Bottom line - real estate agents get paid to help you sell your property. Consequently, they are going to focus exclusively on that objective and disregard your greater economic and legal interests. In fact, real estate agents frequently talk homeowners out of doing things they might otherwise do but for the real estate agents comments: like call a foreclosure defense lawyer.

I've had one real estate agent tell me, ME, A LAWYER, that 'banks cant foreclose while a short-sale offer is pending'. That is absolutely and frighteningly ignorant - in fact, it's dangerous. Nothing stops a bank from foreclosing on a property and auctioning it except a lawyer defending the foreclosure lawsuit. What are you going to do when your real estate agent is wrong? Are you going to ask your real estate agent to inform the judge that 'a short sale offer was pending and the bank cannot foreclose legally'?

Taking legal advice from a real estate agent handling your short sale is no different than trusting the advice of a used car salesman regarding the reliability of the vehicle you are thinking of buying from him. HE HAS A FINANCIAL INTEREST IN TELLING YOU WHATEVER HE NEEDS TO MAKE YOU GO FORWARD WITH THE TRANSACTION. It is a classic conflict of interest.

And let's not kid ourselves - real estate agents bring no particular skill or expertise to the table. They have no particular knowledge or ability that is in any way valuable; they have no training worth mentioning; and whatever experience they have has taught them one thing: TO OBFUSCATE ANY FACT TENDING TO REDUCE THE PROBABILITY OF A SALE HAPPENING.

Am I ripping real estate agents? Yes. Am I doing so unfairly? No, not when real estate agents take the lead on matters far beyond their licensing, training and expertise. In my experience, real estate agents are part of the problem, not part of the solutiion. Much of the disinformation out there comes from real estate agents trying to hustle sales through and they have a vested interest in one thing only: a sale, any sale, under any circumstance and at any price.

So be weary of what real estate agents tell you. I know of real estate agents that tell their clients NOT to answer lawsuits in court - that is absolutely the worst advice I've ever heard and anyone who tells you that should be fired immediately and never spoken to again.

If you get sued (the page on top will be called a lis pendens) talk to a lawyer, any lawyer, immediately. Even if you don't speak to a lawyer, you must answer the lawsuit in accordance with the instructions appearing on the summons (and with the rules of civil procedure applicable in your jurisdiction). Whatever you do, do not trust the advice of a commissioned sales agent - like a real estate agent.

Remember what these morons were telling everyone four years ago - NOW IS A GREAT TIME TO BUY! AT 400,000 DOLLARS, THIS MYRTLE BEACH CONDO IS A GREAT INVESTMENT!

PT Barnum says that a sucker is born every minute (or whatever). You people in Charleston, Mt Pleasant, Myrtle Beach, James Island and wherever else in South Carolina that are facing foreclosure or trying for a short-sale, Consider yourselves on notice.

More Hyenas! Forensic Mortgage Loan Audits are a Joke

David Traywick — Sun, 19 Feb 2012 19:05:00 GMT

This office has several clients who unfortunately paid money to a company who has sold them a service or product called a 'forensic loan audit'. Some of these people actually sell 'services' to lawyers. Incredible. If your lawyer is talking about forensic loan audits, he doesn't know what he is doing. There is no way on earth to perform such an audit without the subpoena power and rules of procedure - and to obtain the power of those rules, a lawsuit must be extant.

I will, however, provide a link to the Federal Trade Commission website that discusses the predatory practices of people holding themselves out as experts in something called 'forensic loan auditing' ftc describes scam:

In exchange for an upfront fee of several hundred dollars, so-called forensic loan auditors, mortgage loan auditors, or foreclosure prevention auditors backed by forensic attorneys offer to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The “auditors” say you can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.

An absolute joke. First, in order to bring value to an investigation, one must have access to resources not commonly available. These people use public information to provide breathtakingly useless reports that purport to analyze compliance with applicable laws. In point of fact, they do nothing but compile a few documents that would never be admitted into evidence in a Court and therefore furnish no leverage as against your lender whatsoever, even assuming such reports turned up anything out of the ordinary - which they wont.

If you suspect sloppy paperwork, file a lawsuit and establish the fact of it by subpoen and the rules of discovery. And do not try to be an amateur lawyer, and if you decide to be one, don't worry about the substantive law or the evidence in your case. The fact is if you are interested in handling your own case, pick up the Rules of Civil Procedure for your jurisdiction and start reading those - knowing the rules of the game are far more important than knowing anything in particular about your case, as incredible as that sounds.

Upside Down Condos: Myrtle Beach & South Carolina

David Traywick — Sun, 19 Feb 2012 17:40:00 GMT

This office has noted a marked increase in the number of borrowers seeking advice regarding their prospects of successfully walking away from loans on Myrtle Beach condos and other properties that are significantly upside down. Myrtle Beach is among the worst hit areas in the entire State of South Carolina as far as diminished property values. The typical profile of the inquiring parties looks something like this:

1. Bought condo or property between 2005 and 2008;

2. Condo worth around 1/3 of what was paid and currently owed;

3. Property owner lives out of state - typically somewhere farther up the easter seaboard;

4. Is able to continue making payments, but no longer wishes to do so;

5. Doesn't care about taking a big credit hit, but desires to proptect other assets and income; and

6. Doesn't know how banks are likely to react in the event the borrower decides to walk away.

This blog post will attempt to answer their questions.

First, this office never recommends a strategic default. It will never tell a client or prospective client that it is in their best interest to default or walk away from an upside down or underwater loan. That would be crossing the line between giving legal advice and financial advice - something this office is loathe to do. However, once a client has made the decision to let the mortgage go, we can help in a number of ways.

Typically, the first thing this office does is to send a letter to all of your lenders. That letter instructs the lender to stop telephoning and sending mail to the defaulting party. Such a letter is sometimes known as a letter of protection. That letter will put the lender on notice that it is dealing with an attorney and that it is no longer free to telephone a client directly. The Fair Debt Collection Practices Act states that a debt collector may not contact a debtor after the debt collector knows the debtor is represented by an attorney. If the debt collector does so, a statutory violation of 1000 dollars plus attorneys fees might be available. This office is currently analyzing whether mortgage servicers such as Bank of America, GMAC, Wells Fargo, Chase and CitiMortgage are debt collectors under the Fair Debt Collection Practices Act as it is currently unclear whether they are or are not. Typically, the servicers continue calling and writing letters to debtors even after they are aware that the debtor is contacted by an attorney. Our office has some test suits filed currently for violations of the FDCPA by mortgage servicers which have contacted our clients after we sent protection letters and will keep our readers informed as those cases develop.

After sending a protection letter, this office typically works on all varieties of loss mitigation on a two pronged track: we seek loan modifications as well as short sales and deeds in lieu, depending on the circumstances of the client's particular case and the client's actual objectives. Our office is developing a strong track record of success of attaining both short-sales and deeds in lieu of foreclosure as well as loan modifications - although loan modifications can be complicated by the type of loan you have - whether it is a GSE (fannie or freddy) owned or securitized loan, or a private securitization trust or otherwise. Regardless, we work on every approach in order to try to provide the property owner with options. Typically, Myrtle Beach condo and other property owners who are upside down on their mortgages or buried in negative equity just want to get rid of their property - we sympathize, but that isn't any reason to reject loan modifications in the period before a final resolution, whatever that might be whether actual foreclosure or short sale or deed in lieu.

This office has developed relationships with real estate agents in Myrtle Beach and trained them on the ins and outs of short sales and we work exclusively with those agents. If you already have your condo listed with an agent, if you retain this office to help you with your strategic default you are going to need to explain why your agent brings value or I'm going to insist on replacing yours with mine.* Standard listing agreements are riddled with potential problems that I would never advise a client to sign off on and this office has developed its own customized real estate listing contract that provides my strategic default clients with maximum flexibility - which is essential in a strategic default situation. It is part of our approach to strategic defaults - work every angle available simaltaneously and avoid committment to or reliance on any particular approach at all costs - especially short sales. FACT - your real estate agent will be hostile to a deed in lieu solution.

Finally, this office, through committment to and extensive experience in strategic default litigation and foreclosure defense in the State of South Carolina, has developed an extremely aggressive foreclosure defense strategy that puts an enormous amount of pressure on the opposing party. Typically, as soon as this office appears in litigation, the foreclosure mills (eg. Rogers Townsend Thomas) refer the case to some other law firm, typically a large, expensive law firm - forcing the discount law firms out of the litigation and the big, expensive defense firms into the dispute results in your lender spending exponentially more money on attorneys fees and costs than it wants to. This office engages in aggressive motions practice and hard nosed discovery practices in order to find what everybody knows is present in 90% of these cases: sloppy bank paperwork, lost paperwork, missing assignments and indorsements, misleading representations by bank personnel regarding the modification process, lack of empathy for difficulties a borrower might be having, incomprehensible processes and procedures set up to deal with non-performing loans, etc. If there is damaging material regarding the underwriting, terms, transfer, assignment, securitization or servicing of a loan, this office has become very good at finding it. Dont be fooled by 'forensic loan audits'. There is no way to trace a loan from start to finish without having access to the subpoena power of a civil suit or by leveraging the rules of civil procedure in the context of a suit. Only a lawyer is qualified to accomplish such discovery and this office is one of the very few in this state that would know where to begin such an investigation.

Results: Your credit will take a hit, although typically not as badly as it otherwise would without the benefit of our all-fronts assault on your underwater mortgage or upside down loan. We CANNOT and WILL NEVER try to persuade you that we know what the outcome will be - outcome is impossible to know for a variety of reasons. This office can promise you however that everything that it can think of to do will be done. This office can affirmatively state that it has developed a certain skill at creating leverage where others might be unable to - and leverage is the name of the litigation game. Furthermore, we know the job isn't completed just because the bank agrees to waive deficiency, accept a deed in lieu of foreclosing, or whatever other solution may develop. We are aware of the tax ramifications of a deficiency waiver or settlement (such as short-sale or deed in lieu) for less than an amount stated, but we have developed techniques and language as part of our settlement letters that mitigate your tax liability for forgiven obligations - to wit, we work with your accountant to hammer down the amount property attributable to you as taxable income as part of a waiver of deficiency or other settlement - assuming any tax liability is generated at all.

EXPECT that this office charges signicantly more for its skill, knowledge and experience in this emerging practice area. You can definitely find part of what this office offers to its clients and find it as part of a program that will cost you less. You cannot find the efficiencies and knowledge this office has accumulated in this practice area from anyone else this office is aware of. If you need the best chance at the best possible outcome, this office is the only choice.

Horry County and Myrtle Beach Condo owners, consider yourselves on notice: this office knows you want out, because we hear from you every week; this office knows you don't see any good solutions, but there is a least damaging outcome and we give you the best chance of realizing it.

*THIS OFFICE DOES NOT SHARE FEES OR RECEIVE ANY COMPENSATION FROM REAL ESTATE AGENTS WE RECOMMEND NOR DO WE CLOSE LOANS OR SELL TITLE INSURANCE. WE RECOMMEND REAL ESTATE AGENTS ONLY INSOFAR AS WE CONCLUDE THEIR SKILLS AND EXPERIENCE ARE SUITED TO ADVANCING A CLIENT'S INTERESTS.

Top 12 Mortgage Loan Servicers Suing for Foreclosure

David Traywick — Sun, 03 Jul 2011 12:53:00 GMT

The below listed companies are the biggest servicers on the planet. Chances are, even if your loan is owned by a securitization trust issued by a private label or a GSE like fannie or freddie, that you are going to have to deal with one of the below. The Isle of Palms, Mt Pleasant, Sullivans Island foreclosure lawyer added items number 11 and 12 to the list based on the number of foreclosures I am seeing on the dockets brought by those servicers.

Bank of America $2,135.30 19.9%
Wells Fargo $1,811.97 16.9%
JPMorgan Chase & Co $1,353.60 12.6%
Citigroup Inc $677.81 6.3%
GMAC/Ally Financial $349.08 3.2%
US Bancorp $189.85 1.8%
SunTrust Banks Inc $175.93 1.6%
PHH Mortgage $155.97 1.4%
OneWest Bank, CA (IndyMac) $155.00 1.4%
PNC Financial Services $149.94 1.4%
HSBC ? ?
Aurora ? ?

The Charleston Strategic Default and Foreclosure Defense Attorney can assist you in coming to terms with the above servicers.

Benefits of South Carolina foreclosure lawyer's services include:

Stopping telephone calls.
Stopping the foreclosure.
Filing counterclaims where appropriate in order to leverage parallel negotiations.
Arraning a loan modification if you want to stay in the home indefinitely.
Negotiations with second lenders offering favorable terms to borrower (you).
Short sale initiation, negotiation, closing.
Securing waiver of deficiency judgments.
Deed in Lieu where all else fails.
Obtaining Walking Away cash (cash for keys, aka 'jingle mail') in some cases.

Additionally, and perhaps as importantly, the Mt Pleasant, James Island, Charleston, Isle of Palms and Sullivans Island foreclosure defense lawyer organizes everything for you, bringing appropriate resources to bear as necessity requires. Our all points approach alleviates stress on the debtor property owner.

Cities & Counties We Serve: Charleston, Berkeley, Georgetown, Horry, Beaufort, Dorchester, Richland, Calhoun; Mt. Pleasant, James Island, McClellanville, Columbia, Irmo, Summerville, Folly Beach, Isle of Palms, Sullivans Island, Myrtle Beach, North Myrtle Beach, Kiawah, Seabrook, Edisto, Hilton Head, Awendaw, Daniel Island, North Charleston, Ladson, Hanahan, Goose Creek, Ridgeville, Moncks Corner.

Contact our Foreclosure and Strategic Default Attorney today.

Numbers Games: Cost/Benefit Analyses - Factors Influencing the Decision to Walk Away (Strategic Default)

David Traywick — Sun, 03 Jul 2011 09:12:00 GMT

Are you asking yourself whether it makes sense to stay in your house when it is upside down and underwater? Are you wondering whether it is rational to keep making payments on an investment property or real property asset whether it is your primary residence, investment property, rental property, or undeveloped lot?

Here are a few of the factors that might influence your decision to walk away or not:

Any of the mortgages on your property held by Citimortgage, Bank of America, GMAC, or HSBC are good candidates for a strategic default.
Any of the mortgages on your property held by Wells Fargo, Chase, or any of the smaller regional banks are more difficult candidates for strategic default.

Additionally, you need to calculate how much the bank knows about your finances and assets:

Your lender is checking your credit report routinely. If it finds additional mortgage loans in good standing, strategic default is riskier.
If you have high credit limits with multiple open accounts (credit cards) and low balances and a history of perfect payment, strategic default is riskier.
If you have a good job, and have disclosed that information to your lender (application anyone?), strategic default is riskier.

On the other hand, if your credit is already wrecked, of if you have determined that you are willing to trade a wrecked report in exchange for walking away from a bad loan, an upside down mortgage, or investment property that is underwater, it might still be a rational economic decision to default.

Having an attorney handle your default is critical. Real estate agents offer to work out short-sales, but they lack the punch lawyers bring to the table in the all important negotiation phase of that process. Having a foreclosure attorney handle negotiations is vastly superior to sending in a real estate agent, which is akin to showing up to an artillery duel with a sling-shot. Don't make that mistake.

Traywick Law Offices deploys a combined arms approach to attacking your strategic default dilemma, and we give you the best possible chance of emerging ahead – frequently way ahead – of where you are now.

For most of you, your main concern is your credit score. The only way we can respond to that is thusly: banks require a rectal scraping, 20% down, a perfect payment history, a long track record of stable employment, and your first male child before lending you money these days. Have you applied for a credit card lately? The offers consist of puny, nearly useless account limits, onerous terms, and even those extensions of credit are offered sparingly.

Credit isn't what it used to be. We are back to the 1980's in terms of lending standards. Plus, the GSEs (fannie and Freddie) will eventually be unwound and privatized. Once the crisis is over, those outfits will cease lending and getting a mortgage loan will be reserved for the elite – as it was in the 80s. The car dealerships are so desperate to move metal, you can always get financed there, even if they tune you up for a substantial down payment.

Conclusion: walking away from your good credit doesn't cost you as much as it once might have.