By: Harris S.B. No. 27
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of persons that provide consumer credit
1-2 information to third parties; providing a civil penalty.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Title 2, Business & Commerce Code, is amended by
1-5 adding Chapter 20 to read as follows:
1-6 CHAPTER 20. REGULATION OF CONSUMER CREDIT REPORTING AGENCIES
1-7 Sec. 20.01. DEFINITIONS. In this chapter:
1-8 (1) "Adverse action" includes:
1-9 (A) the denial of, increase in a charge for, or
1-10 reduction in the amount of insurance for personal, family, or
1-11 household purposes;
1-12 (B) the denial of employment or other decision
1-13 made for employment purposes that adversely affects a current or
1-14 prospective employee; or
1-15 (C) an action or determination with respect to a
1-16 consumer's application for credit that is adverse to the consumer's
1-17 interests.
1-18 (2) "Consumer" means an individual who resides in this
1-19 state.
1-20 (3) "Consumer file" means all of the information about
1-21 a consumer that is recorded and retained by a consumer reporting
1-22 agency regardless of how the information is stored.
1-23 (4) "Consumer report" means a communication or other
2-1 information by a consumer reporting agency relating to the credit
2-2 worthiness, credit standing, credit capacity, debts, character,
2-3 general reputation, personal characteristics, or mode of living of
2-4 a consumer that is used or expected to be used or collected, wholly
2-5 or partly, as a factor in establishing the consumer's eligibility
2-6 for credit or insurance for personal, family, or household
2-7 purposes, employment purposes, or other purpose authorized under
2-8 Sections 603 and 604 of the Fair Credit Reporting Act (15 U.S.C.
2-9 Sections 1681a and 1681b), as amended. The term does not include:
2-10 (A) a report containing information solely on a
2-11 transaction between the consumer and the person making the report;
2-12 (B) an authorization or approval of a specific
2-13 extension of credit directly or indirectly by the issuer of a
2-14 credit card or similar device;
2-15 (C) a report in which a person who has been
2-16 requested by a third party to make a specific extension of credit
2-17 directly or indirectly to a consumer makes a decision with respect
2-18 to the request, if the third party advises the consumer of the name
2-19 and address of the person to whom the request was made and the
2-20 person makes the disclosures that must be made under Section 615 of
2-21 the Fair Credit Reporting Act (15 U.S.C. Section 1681m), as
2-22 amended, to the consumer in the event of adverse action against the
2-23 consumer;
2-24 (D) any communication of information described
2-25 in this subdivision among persons related by common ownership or
3-1 affiliated by corporate control; or
3-2 (E) any communication of other information among
3-3 persons related by common ownership or affiliated by corporate
3-4 control, if it is clearly and conspicuously disclosed to the
3-5 consumer that the information may be communicated among such
3-6 persons and the consumer is given the opportunity before the time
3-7 that the information is initially communicated to direct that such
3-8 information not be communicated among such persons.
3-9 (5) "Consumer reporting agency" means a person that
3-10 regularly engages wholly or partly in the practice of assembling or
3-11 evaluating consumer credit information or other information on
3-12 consumers to furnish consumer reports to third parties for monetary
3-13 fees, for dues, or on a cooperative nonprofit basis. The term does
3-14 not include a business entity that provides only check verification
3-15 or check guarantee services.
3-16 (6) "Investigative consumer report" means all or part
3-17 of a consumer report in which information on the character, general
3-18 reputation, personal characteristics, or mode of living of a
3-19 consumer is obtained through a personal interview with a neighbor,
3-20 friend, or associate of the consumer or others with whom the
3-21 consumer is acquainted or who may have knowledge concerning any
3-22 such information. The term does not include specific factual
3-23 information on a consumer's credit record obtained directly from a
3-24 creditor of the consumer or from a consumer reporting agency when
3-25 the information was obtained directly from a creditor of the
4-1 consumer or from the consumer.
4-2 Sec. 20.02. PERMISSIBLE PURPOSES; PROHIBITION; USE OF
4-3 CONSUMER'S SOCIAL SECURITY NUMBER. (a) A consumer reporting
4-4 agency may furnish a consumer report only:
4-5 (1) in response to a court order issued by a court
4-6 with proper jurisdiction;
4-7 (2) in accordance with the written instructions of the
4-8 consumer to whom the report relates; or
4-9 (3) to a person the agency has reason to believe:
4-10 (A) intends to use the information in connection
4-11 with a transaction involving the extension of credit to, or review
4-12 or collection of an account of, the consumer to whom the report
4-13 relates;
4-14 (B) intends to use the information for
4-15 employment purposes as authorized under the Fair Credit Reporting
4-16 Act (15 U.S.C. Section 1681 et seq.), as amended, and regulations
4-17 adopted under that Act;
4-18 (C) intends to use the information in connection
4-19 with the underwriting of insurance involving the consumer as
4-20 authorized under the Fair Credit Reporting Act (15 U.S.C. Section
4-21 1681 et seq.), as amended, and regulations adopted under that Act;
4-22 (D) intends to use the information in connection
4-23 with a determination of the consumer's eligibility for a license or
4-24 other benefit granted by a governmental entity required by law to
4-25 consider an applicant's financial responsibility or status;
5-1 (E) has a legitimate business need for the
5-2 information in connection with a business transaction involving the
5-3 consumer; or
5-4 (F) intends to use the information for any
5-5 purpose authorized under the Fair Credit Reporting Act (15 U.S.C.
5-6 Section 1681 et seq.), as amended, and regulations adopted under
5-7 that Act.
5-8 (b) A consumer reporting agency may not prohibit a user of a
5-9 consumer report or investigative consumer report from disclosing
5-10 the contents of the report or providing a copy of the report to the
5-11 consumer to whom it relates at the consumer's request if adverse
5-12 action against the consumer based wholly or partly on the report
5-13 has been taken or is contemplated by the user of the report. A
5-14 user of a consumer report or a consumer reporting agency may not be
5-15 found liable or otherwise held responsible for a disclosed or
5-16 copied report when acting under this subsection. The disclosure or
5-17 copy of the report, by itself, does not make a user of the report a
5-18 consumer reporting agency.
5-19 (c) If a consumer furnishes the consumer's social security
5-20 number to a person for use in obtaining a consumer report, the
5-21 person shall include the consumer's social security number with the
5-22 request for the consumer report and shall include the social
5-23 security number with all future reports of information regarding
5-24 the consumer made by the person to a consumer reporting agency
5-25 unless the person has reason to believe that the social security
6-1 number is inaccurate.
6-2 Sec. 20.03. DISCLOSURES TO CONSUMERS. (a) On request and
6-3 proper identification provided by a consumer, a consumer reporting
6-4 agency shall disclose to the consumer in writing all information
6-5 pertaining to the consumer in the consumer reporting agency's files
6-6 at the time of the request, including:
6-7 (1) the name of each person requesting credit
6-8 information about the consumer during the preceding six months and
6-9 the date of each request;
6-10 (2) a set of instructions describing how information
6-11 is presented on the consumer reporting agency's written disclosure
6-12 of the consumer file; and
6-13 (3) if the consumer reporting agency compiles and
6-14 maintains files on a nationwide basis, a toll-free number at which
6-15 personnel are available to consumers during normal business hours
6-16 for use in resolving a dispute if the consumer submits a written
6-17 dispute to the consumer reporting agency.
6-18 (b) The information must be disclosed in a clear, accurate
6-19 manner that is understandable to a consumer.
6-20 (c) A consumer reporting agency shall provide a copy of the
6-21 consumer's file to the consumer on the request of the consumer and
6-22 on evidence of proper identification, as directed by the Fair
6-23 Credit Reporting Act (15 U.S.C. Section 1681 et seq.), as amended,
6-24 and regulations adopted under that Act.
6-25 Sec. 20.04. CHARGES FOR CERTAIN DISCLOSURES. (a) Except as
7-1 provided by Subsection (b), a consumer reporting agency may impose
7-2 a reasonable charge on a consumer for the disclosure of information
7-3 pertaining to the consumer. The amount of the charge may not
7-4 exceed $8. On January 1 of each year, a consumer reporting agency
7-5 may increase the charge for disclosure to a consumer. The
7-6 increase, if any, must be based proportionally on changes to the
7-7 Consumer Price Index for All Urban Consumers as determined by the
7-8 United States Department of Labor with fractional changes rounded
7-9 to the nearest 50 cents.
7-10 (b) A consumer reporting agency may not charge a fee for:
7-11 (1) a request by a consumer for a copy of the
7-12 consumer's file made not later than the 60th day after the date on
7-13 which adverse action is taken against the consumer;
7-14 (2) notification of the deletion of information that
7-15 is found to be inaccurate or can no longer be verified sent to a
7-16 person designated by the consumer, as prescribed by Section 611 of
7-17 the Fair Credit Reporting Act (15 U.S.C. Section 1681i), as
7-18 amended;
7-19 (3) a set of instructions for understanding the
7-20 information presented on the consumer report; or
7-21 (4) a toll-free telephone number that consumers may
7-22 call to obtain additional assistance concerning the consumer
7-23 report.
7-24 Sec. 20.05. REPORTING OF INFORMATION PROHIBITED.
7-25 (a) Except as provided by Subsection (b), a consumer reporting
8-1 agency may not furnish a consumer report containing information
8-2 related to:
8-3 (1) a case under Title 11 of the United States Code or
8-4 under the federal Bankruptcy Act in which the date of entry of the
8-5 order for relief or the date of adjudication predates the consumer
8-6 report by more than 10 years;
8-7 (2) a suit or judgment in which the date of entry
8-8 predates the consumer report by more than seven years or the
8-9 governing statute of limitations, whichever is longer;
8-10 (3) a tax lien in which the date of payment predates
8-11 the consumer report by more than seven years;
8-12 (4) a record of arrest, indictment, or conviction of a
8-13 crime in which the date of disposition, release, or parole predates
8-14 the consumer report by more than seven years; or
8-15 (5) another item or event that predates the consumer
8-16 report by more than seven years.
8-17 (b) A consumer reporting agency may furnish a consumer
8-18 report that contains information described by Subsection (a) if the
8-19 information is provided in connection with:
8-20 (1) a credit transaction with a principal amount that
8-21 is or may reasonably be expected to be $150,000 or more;
8-22 (2) the underwriting of life insurance for a face
8-23 amount that is or may reasonably be expected to be $150,000 or
8-24 more; or
8-25 (3) the employment of a consumer at an annual salary
9-1 that is or may reasonably be expected to be $75,000 or more.
9-2 (c) A consumer reporting agency may not furnish medical
9-3 information about a consumer in a consumer report that is being
9-4 obtained for employment purposes or in connection with a credit,
9-5 insurance, or direct marketing transaction unless the consumer
9-6 consents to the furnishing of the medical information.
9-7 Sec. 20.06. DISPUTE PROCEDURE. (a) If the completeness or
9-8 accuracy of information contained in a consumer's file is disputed
9-9 by the consumer and the consumer notifies the consumer reporting
9-10 agency of the dispute, the agency shall reinvestigate the disputed
9-11 information free of charge and record the current status of the
9-12 disputed information not later than the 30th business day after the
9-13 date on which the agency receives the notice. The consumer
9-14 reporting agency shall provide the consumer with the option of
9-15 notifying the agency of a dispute concerning the consumer's file by
9-16 speaking directly to a representative of the agency during normal
9-17 business hours.
9-18 (b) Not later than the fifth business day after the date on
9-19 which a consumer reporting agency receives notice of a dispute from
9-20 a consumer in accordance with Subsection (a), the agency shall
9-21 provide notice of the dispute to each person who provided any
9-22 information related to the dispute.
9-23 (c) A consumer reporting agency may terminate a
9-24 reinvestigation of information disputed by a consumer under
9-25 Subsection (a) if the agency reasonably determines that the dispute
10-1 is frivolous or irrelevant. An agency that terminates a
10-2 reinvestigation of disputed information under this subsection shall
10-3 promptly notify the consumer of the termination and the reasons for
10-4 the termination by mail, or if authorized by the consumer, by
10-5 telephone. The presence of contradictory information in a
10-6 consumer's file does not by itself constitute reasonable grounds
10-7 for determining that the dispute is frivolous or irrelevant.
10-8 (d) If disputed information is found to be inaccurate or
10-9 cannot be verified after a reinvestigation under Subsection (a),
10-10 the consumer reporting agency, unless otherwise directed by the
10-11 consumer, shall promptly delete the information from the consumer's
10-12 file, revise the consumer file, and provide the revised consumer
10-13 report to the consumer and, on the request of the consumer, to each
10-14 person who requested the consumer report within the preceding six
10-15 months. The consumer reporting agency may not report the
10-16 inaccurate or unverified information in subsequent reports.
10-17 (e) Information deleted under Subsection (d) may not be
10-18 reinserted in the consumer's file unless the person who furnishes
10-19 the information to the consumer reporting agency reinvestigates and
10-20 states in writing or by electronic record to the agency that the
10-21 information is complete and accurate.
10-22 (f) A consumer reporting agency shall provide written notice
10-23 of the results of a reinvestigation or reinsertion made under this
10-24 section not later than the fifth business day after the date on
10-25 which the reinvestigation or reinsertion has been completed. The
11-1 notice must include:
11-2 (1) a statement that the reinvestigation is complete;
11-3 (2) a statement of the determination made by the
11-4 agency on the completeness or accuracy of the disputed information;
11-5 (3) a copy of the consumer's file or consumer report
11-6 and a description of the results of the reinvestigation;
11-7 (4) a statement that a description of the procedure
11-8 used to determine the accuracy and completeness of the information
11-9 shall be provided to the consumer by the agency on request,
11-10 including the name, business address, and, if available, the
11-11 telephone number of each person contacted in connection with the
11-12 information;
11-13 (5) a statement that the consumer is entitled to add a
11-14 statement to the consumer's file disputing the accuracy or
11-15 completeness of the information as provided by Section 611 of the
11-16 Fair Credit Reporting Act (15 U.S.C. Section 1681i), as amended;
11-17 and
11-18 (6) a statement that the consumer may be entitled to
11-19 dispute resolution as prescribed by this section, after the
11-20 consumer receives the notice specified under this subsection.
11-21 (g) This section does not require a person who obtains a
11-22 consumer report for resale to another person to alter or correct an
11-23 inaccuracy in the consumer report if the report was not assembled
11-24 or prepared by the person.
11-25 Sec. 20.07. CORRECTION OF INACCURATE INFORMATION. (a) A
12-1 consumer reporting agency shall provide a person who provides
12-2 consumer credit information to the agency with the option of
12-3 correcting previously reported inaccurate information by submitting
12-4 the correction by facsimile or other automated means.
12-5 (b) The credit reporting agency which receives a correction
12-6 shall have reasonable procedures to assure that previously reported
12-7 inaccurate information in a consumer's file is corrected in a
12-8 prompt and timely fashion.
12-9 Sec. 20.08. CONSUMER'S RIGHT TO FILE ACTION IN COURT OR
12-10 ARBITRATE DISPUTES. (a) An action to enforce an obligation of a
12-11 consumer reporting agency to a consumer under this chapter may be
12-12 brought in any court as provided by the Fair Credit Reporting Act
12-13 (15 U.S.C. Section 1681 et seq.), as amended, or, if agreed to by
12-14 both parties, may be submitted to binding arbitration after the
12-15 consumer has followed all dispute procedures in Section 20.06 and
12-16 has received the notice specified in Section 20.06(f) in the manner
12-17 provided by the rules of the American Arbitration Association.
12-18 (b) A decision rendered by an arbitrator under this section
12-19 does not affect the validity of an obligation or debt owed by the
12-20 consumer to any party.
12-21 (c) A prevailing party in an action or arbitration
12-22 proceeding brought under this section shall be compensated for the
12-23 party's attorney fees and costs of the proceeding as determined by
12-24 the court or arbitration.
12-25 (d) A consumer may not submit to arbitration more than one
13-1 action against a particular consumer reporting agency during any
13-2 120-day period.
13-3 (e) The results of an arbitration action brought against a
13-4 consumer reporting agency doing business in this state shall be
13-5 communicated in a timely manner to other consumer reporting
13-6 agencies doing business in this state.
13-7 (f) If a determination is made in favor of a consumer after
13-8 submission of a dispute to arbitration, the disputed adverse
13-9 information in the consumer's file or record shall be removed or
13-10 stricken in a timely manner. If the adverse information is not
13-11 removed or stricken, the consumer may bring an action against the
13-12 noncomplying agency under this section regardless of the 120-day
13-13 waiting period required under this section.
13-14 Sec. 20.09. CIVIL LIABILITY. (a) A consumer reporting
13-15 agency that wilfully violates this chapter is liable to the
13-16 consumer against whom the violation occurs for the greater of three
13-17 times the amount of actual damages to the consumer or $1,000,
13-18 reasonable attorney fees, and court or arbitration costs.
13-19 (b) A consumer reporting agency that negligently violates
13-20 this chapter is liable to the consumer against whom the violation
13-21 occurs for the greater of the amount of actual damages to the
13-22 consumer or $500, reasonable attorney fees, and court or
13-23 arbitration costs. A consumer reporting agency is not considered
13-24 to have negligently violated this chapter if, not later than the
13-25 30th day after the date on which the agency receives notice of a
14-1 dispute from the consumer under Section 20.06 that clearly explains
14-2 the nature and substance of the dispute, the agency completes the
14-3 reinvestigation and sends the consumer and, at the request of the
14-4 consumer, each person who received the consumer information written
14-5 notification of the results of the reinvestigation in accordance
14-6 with Section 20.06(f).
14-7 (c) In addition to liability imposed under Subsection (a), a
14-8 consumer reporting agency that does not correct a consumer's file
14-9 and consumer report before the 10th day after the date on which a
14-10 judgment is entered against the agency because of inaccurate
14-11 information contained in a consumer's file is also liable for
14-12 $1,000 a day until the inaccuracy is corrected.
14-13 Sec. 20.10. REMEDIES CUMULATIVE. An action taken under this
14-14 chapter does not prohibit a consumer from taking any other action
14-15 authorized by law except that a credit reporting agency may not be
14-16 subject to suit with respect to any issue that was the subject of
14-17 an arbitration proceeding brought under Section 20.08.
14-18 SECTION 2. This Act takes effect October 1, 1997.
14-19 SECTION 3. The importance of this legislation and the
14-20 crowded condition of the calendars in both houses create an
14-21 emergency and an imperative public necessity that the
14-22 constitutional rule requiring bills to be read on three several
14-23 days in each house be suspended, and this rule is hereby suspended.