Amend CSHB 1971 by inserting the following appropriately
numbered SECTION and renumbering the remaining SECTIONS of the bill
accordingly:
SECTION _____. (a) Title 2, Business & Commerce Code, is
amended by adding Chapter 20 to read as follows:
CHAPTER 20. REGULATION OF CONSUMER CREDIT REPORTING AGENCIES
Sec. 20.01. DEFINITIONS. In this chapter:
(1) "Adverse action" includes:
(A) the denial of, increase in a charge for, or
reduction in the amount of insurance for personal, family, or
household purposes;
(B) the denial of employment or other decision
made for employment purposes that adversely affects a current or
prospective employee; or
(C) an action or determination with respect to a
consumer's application for credit that is adverse to the consumer's
interests.
(2) "Consumer" means an individual who resides in this
state.
(3) "Consumer file" means all of the information about
a consumer that is recorded and retained by a consumer reporting
agency regardless of how the information is stored.
(4) "Consumer report" means a communication or other
information by a consumer reporting agency relating to the credit
worthiness, credit standing, credit capacity, debts, character,
general reputation, personal characteristics, or mode of living of
a consumer that is used or expected to be used or collected, wholly
or partly, as a factor in establishing the consumer's eligibility
for credit or insurance for personal, family, or household
purposes, employment purposes, or other purpose authorized under
Sections 603 and 604 of the Fair Credit Reporting Act (15 U.S.C.
Sections 1681a and 1681b), as amended. The term does not include:
(A) a report containing information solely on a
transaction between the consumer and the person making the report;
(B) an authorization or approval of a specific
extension of credit directly or indirectly by the issuer of a
credit card or similar device;
(C) a 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 makes a decision with respect
to the request, if the third party advises the consumer of the name
and address of the person to whom the request was made and the
person makes the disclosures that must be made under Section 615 of
the Fair Credit Reporting Act (15 U.S.C. Section 1681m), as
amended, to the consumer in the event of adverse action against the
consumer;
(D) any communication of information described
in this subdivision among persons related by common ownership or
affiliated by corporate control; or
(E) any 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.
(5) "Consumer reporting agency" means a person that
regularly engages wholly or partly in the practice of assembling or
evaluating consumer credit information or other information on
consumers to furnish consumer reports to third parties for monetary
fees, for dues, or on a cooperative nonprofit basis. The term does
not include a business entity that provides only check verification
or check guarantee services.
(6) "Investigative consumer report" means all or part
of a consumer report in which information on the character, general
reputation, personal characteristics, or mode of living of a
consumer is obtained through a personal interview with a neighbor,
friend, or associate of the consumer or others with whom the
consumer is acquainted or who may have knowledge concerning any
such information. The term does 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
the information was obtained directly from a creditor of the
consumer or from the consumer.
Sec. 20.02. PERMISSIBLE PURPOSES; PROHIBITION; USE OF
CONSUMER'S SOCIAL SECURITY NUMBER. (a) A consumer reporting
agency may furnish a consumer report only:
(1) in response to a court order issued by a court
with proper jurisdiction;
(2) in accordance with the written instructions of the
consumer to whom the report relates; or
(3) to a person the agency has reason to believe:
(A) intends to use the information in connection
with a transaction involving the extension of credit to, or review
or collection of an account of, the consumer to whom the report
relates;
(B) intends to use the information for
employment purposes as authorized under the Fair Credit Reporting
Act (15 U.S.C. Section 1681 et seq.), as amended, and regulations
adopted under that Act;
(C) intends to use the information in connection
with the underwriting of insurance involving the consumer as
authorized under the Fair Credit Reporting Act (15 U.S.C. Section
1681 et seq.), as amended, and regulations adopted under that Act;
(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 entity required by law to
consider an applicant's financial responsibility or status;
(E) has a legitimate business need for the
information in connection with a business transaction involving the
consumer; or
(F) intends to use the information for any
purpose authorized under the Fair Credit Reporting Act (15 U.S.C.
Section 1681 et seq.), as amended, and regulations adopted under
that Act.
(b) A consumer reporting agency may not prohibit a user of a
consumer report or investigative consumer report from disclosing
the contents of the report or providing a copy of the report to the
consumer to whom it relates at the consumer's request if adverse
action against the consumer based wholly or partly on the report
has been taken or is contemplated by the user of the report. A
user of a consumer report or a consumer reporting agency may not be
found liable or otherwise held responsible for a disclosed or
copied report when acting under this subsection. The disclosure or
copy of the report, by itself, does not make a user of the report a
consumer reporting agency.
(c) If a consumer furnishes the consumer's social security
number to a person for use in obtaining a consumer report, the
person shall include the consumer's social security number with the
request for the consumer report and shall include the social
security number with all future reports of information regarding
the consumer made by the person to a consumer reporting agency
unless the person has reason to believe that the social security
number is inaccurate.
Sec. 20.03. DISCLOSURES TO CONSUMERS. (a) On request and
proper identification provided by a consumer, a consumer reporting
agency shall disclose to the consumer in writing all information
pertaining to the consumer in the consumer reporting agency's files
at the time of the request, including:
(1) the name of each person requesting credit
information about the consumer during the preceding six months and
the date of each request;
(2) a set of instructions describing how information
is presented on the consumer reporting agency's written disclosure
of the consumer file; and
(3) if the consumer reporting agency compiles and
maintains files on a nationwide basis, a toll-free number at which
personnel are available to consumers during normal business hours
for use in resolving a dispute if the consumer submits a written
dispute to the consumer reporting agency.
(b) The information must be disclosed in a clear, accurate
manner that is understandable to a consumer.
(c) A consumer reporting agency shall provide a copy of the
consumer's file to the consumer on the request of the consumer and
on evidence of proper identification, as directed by the Fair
Credit Reporting Act (15 U.S.C. Section 1681 et seq.), as amended,
and regulations adopted under that Act.
Sec. 20.04. CHARGES FOR CERTAIN DISCLOSURES. (a) Except as
provided by Subsection (b), a consumer reporting agency may impose
a reasonable charge on a consumer for the disclosure of information
pertaining to the consumer. The amount of the charge may not
exceed $8. On January 1 of each year, a consumer reporting agency
may increase the charge for disclosure to a consumer. The
increase, if any, must be based proportionally on changes to the
Consumer Price Index for All Urban Consumers as determined by the
United States Department of Labor with fractional changes rounded
to the nearest 50 cents.
(b) A consumer reporting agency may not charge a fee for:
(1) a request by a consumer for a copy of the
consumer's file made not later than the 60th day after the date on
which adverse action is taken against the consumer;
(2) notification of the deletion of information that
is found to be inaccurate or can no longer be verified sent to a
person designated by the consumer, as prescribed by Section 611 of
the Fair Credit Reporting Act (15 U.S.C. Section 1681i), as
amended;
(3) a set of instructions for understanding the
information presented on the consumer report; or
(4) a toll-free telephone number that consumers may
call to obtain additional assistance concerning the consumer
report.
Sec. 20.05. REPORTING OF INFORMATION PROHIBITED.
(a) Except as provided by Subsection (b), a consumer reporting
agency may not furnish a consumer report containing information
related to:
(1) a case under Title 11 of the United States Code or
under the federal Bankruptcy Act in which the date of entry of the
order for relief or the date of adjudication predates the consumer
report by more than 10 years;
(2) a suit or judgment in which the date of entry
predates the consumer report by more than seven years or the
governing statute of limitations, whichever is longer;
(3) a tax lien in which the date of payment predates
the consumer report by more than seven years;
(4) a record of arrest, indictment, or conviction of a
crime in which the date of disposition, release, or parole predates
the consumer report by more than seven years; or
(5) another item or event that predates the consumer
report by more than seven years.
(b) A consumer reporting agency may furnish a consumer
report that contains information described by Subsection (a) if the
information is provided in connection with:
(1) a credit transaction with a principal amount that
is or may reasonably be expected to be $150,000 or more;
(2) the underwriting of life insurance for a face
amount that is or may reasonably be expected to be $150,000 or
more; or
(3) the employment of a consumer at an annual salary
that is or may reasonably be expected to be $75,000 or more.
(c) A consumer reporting agency may not furnish medical
information about a consumer in a consumer report that is being
obtained for employment purposes or in connection with a credit,
insurance, or direct marketing transaction unless the consumer
consents to the furnishing of the medical information.
Sec. 20.06. DISPUTE PROCEDURE. (a) If the completeness or
accuracy of information contained in a consumer's file is disputed
by the consumer and the consumer notifies the consumer reporting
agency of the dispute, the agency shall reinvestigate the disputed
information free of charge and record the current status of the
disputed information not later than the 30th business day after the
date on which the agency receives the notice. The consumer
reporting agency shall provide the consumer with the option of
notifying the agency of a dispute concerning the consumer's file by
speaking directly to a representative of the agency during normal
business hours.
(b) Not later than the fifth business day after the date on
which a consumer reporting agency receives notice of a dispute from
a consumer in accordance with Subsection (a), the agency shall
provide notice of the dispute to each person who provided any
information related to the dispute.
(c) A consumer reporting agency may terminate a
reinvestigation of information disputed by a consumer under
Subsection (a) if the agency reasonably determines that the dispute
is frivolous or irrelevant. An agency that terminates a
reinvestigation of disputed information under this subsection shall
promptly notify the consumer of the termination and the reasons for
the termination by mail, or if authorized by the consumer, by
telephone. The presence of contradictory information in a
consumer's file does not by itself constitute reasonable grounds
for determining that the dispute is frivolous or irrelevant.
(d) If disputed information is found to be inaccurate or
cannot be verified after a reinvestigation under Subsection (a),
the consumer reporting agency, unless otherwise directed by the
consumer, shall promptly delete the information from the consumer's
file, revise the consumer file, and provide the revised consumer
report to the consumer and, on the request of the consumer, to each
person who requested the consumer report within the preceding six
months. The consumer reporting agency may not report the
inaccurate or unverified information in subsequent reports.
(e) Information deleted under Subsection (d) may not be
reinserted in the consumer's file unless the person who furnishes
the information to the consumer reporting agency reinvestigates and
states in writing or by electronic record to the agency that the
information is complete and accurate.
(f) A consumer reporting agency shall provide written notice
of the results of a reinvestigation or reinsertion made under this
section not later than the fifth business day after the date on
which the reinvestigation or reinsertion has been completed. The
notice must include:
(1) a statement that the reinvestigation is complete;
(2) a statement of the determination made by the
agency on the completeness or accuracy of the disputed information;
(3) a copy of the consumer's file or consumer report
and a description of the results of the reinvestigation;
(4) a statement that a description of the procedure
used to determine the accuracy and completeness of the information
shall be provided to the consumer by the agency on request,
including the name, business address, and, if available, the
telephone number of each person contacted in connection with the
information;
(5) a statement that the consumer is entitled to add a
statement to the consumer's file disputing the accuracy or
completeness of the information as provided by Section 611 of the
Fair Credit Reporting Act (15 U.S.C. Section 1681i), as amended;
and
(6) a statement that the consumer may be entitled to
dispute resolution as prescribed by this section, after the
consumer receives the notice specified under this subsection.
(g) This section does not require a person who obtains a
consumer report for resale to another person to alter or correct an
inaccuracy in the consumer report if the report was not assembled
or prepared by the person.
Sec. 20.07. CORRECTION OF INACCURATE INFORMATION. (a) A
consumer reporting agency shall provide a person who provides
consumer credit information to the agency with the option of
correcting previously reported inaccurate information by submitting
the correction by facsimile or other automated means.
(b) The credit reporting agency which receives a correction
shall have reasonable procedures to assure that previously reported
inaccurate information in a consumer's file is corrected in a
prompt and timely fashion.
Sec. 20.08. CONSUMER'S RIGHT TO FILE ACTION IN COURT OR
ARBITRATE DISPUTES. (a) An action to enforce an obligation of a
consumer reporting agency to a consumer under this chapter may be
brought in any court as provided by the Fair Credit Reporting Act
(15 U.S.C. Section 1681 et seq.), as amended, or, if agreed to by
both parties, may be submitted to binding arbitration after the
consumer has followed all dispute procedures in Section 20.06 and
has received the notice specified in Section 20.06(f) in the manner
provided by the rules of the American Arbitration Association.
(b) A decision rendered by an arbitrator under this section
does not affect the validity of an obligation or debt owed by the
consumer to any party.
(c) A prevailing party in an action or arbitration
proceeding brought under this section shall be compensated for the
party's attorney fees and costs of the proceeding as determined by
the court or arbitration.
(d) A consumer may not submit to arbitration more than one
action against a particular consumer reporting agency during any
120-day period.
(e) The results of an arbitration action brought against a
consumer reporting agency doing business in this state shall be
communicated in a timely manner to other consumer reporting
agencies doing business in this state.
(f) If a determination is made in favor of a consumer after
submission of a dispute to arbitration, the disputed adverse
information in the consumer's file or record shall be removed or
stricken in a timely manner. If the adverse information is not
removed or stricken, the consumer may bring an action against the
noncomplying agency under this section regardless of the 120-day
waiting period required under this section.
Sec. 20.09. CIVIL LIABILITY. (a) A consumer reporting
agency that wilfully violates this chapter is liable to the
consumer against whom the violation occurs for the greater of three
times the amount of actual damages to the consumer or $1,000,
reasonable attorney fees, and court or arbitration costs.
(b) A consumer reporting agency that negligently violates
this chapter is liable to the consumer against whom the violation
occurs for the greater of the amount of actual damages to the
consumer or $500, reasonable attorney fees, and court or
arbitration costs. A consumer reporting agency is not considered
to have negligently violated this chapter if, not later than the
30th day after the date on which the agency receives notice of a
dispute from the consumer under Section 20.06 that clearly explains
the nature and substance of the dispute, the agency completes the
reinvestigation and sends the consumer and, at the request of the
consumer, each person who received the consumer information written
notification of the results of the reinvestigation in accordance
with Section 20.06(f).
(c) In addition to liability imposed under Subsection (a), a
consumer reporting agency that does not correct a consumer's file
and consumer report before the 10th day after the date on which a
judgment is entered against the agency because of inaccurate
information contained in a consumer's file is also liable for
$1,000 a day until the inaccuracy is corrected.
Sec. 20.10. REMEDIES CUMULATIVE. An action taken under this
chapter does not prohibit a consumer from taking any other action
authorized by law except that a credit reporting agency may not be
subject to suit with respect to any issue that was the subject of
an arbitration proceeding brought under Section 20.08.
(b) Subsection (a) of this section takes effect October 1,
1997.