1-1     By:  Harris                                             S.B. No. 27

 1-2           (In the Senate - Filed April 8, 1997; April 10, 1997, read

 1-3     first time and referred to Committee on State Affairs;

 1-4     April 25, 1997, reported favorably, as amended, by the following

 1-5     vote:  Yeas 13, Nays 0; April 25, 1997, sent to printer.)

 1-6     COMMITTEE AMENDMENT NO. 1                               By:  Nelson

 1-7     Amend S.B. No. 27 as follows:

 1-8           (1)  In SECTION 1, at the end of Subdivision (4), Section

 1-9     20.01 of added Chapter 20, Business & Commerce Code (Introduced

1-10     version page 2, after line 48), insert:

1-11                       "(D)  any communication of information described

1-12     in this subdivision among persons related by common ownership or

1-13     affiliated by corporate control; or

1-14                       (E)  any communication of other information among

1-15     persons related by common ownership or affiliated by corporate

1-16     control, if it is clearly and conspicuously disclosed to the

1-17     consumer that the information may be communicated among such

1-18     persons and the consumer is given the opportunity before the time

1-19     that the information is initially communicated to direct that such

1-20     information not be communicated among such persons."

1-21           (2)  In SECTION 1, Paragraph (B), Subdivision (3), Subsection

1-22     (a), Section 20.02 of added Chapter 20, Business & Commerce Code

1-23     (Introduced version page 3, lines 12-13), strike "only if the

1-24     consumer consents in writing to the furnishing of the report" and

1-25     substitute "as authorized under the Fair Credit Reporting Act (15

1-26     U.S.C. Section 1681 et seq.), as amended, and regulations adopted

1-27     under that Act"

1-28           (3)  In SECTION 1, Paragraph (C), Subdivision (3), Subsection

1-29     (a), Section 20.02 of added Chapter 20, Business & Commerce Code

1-30     (Introduced version page 3, lines 15-16), strike "only if the

1-31     consumer consents in writing to the furnishing of the report" and

1-32     substitute "as authorized under the Fair Credit Reporting Act (15

1-33     U.S.C. Section 1681 et seq.), as amended, and regulations adopted

1-34     under that Act"

1-35           (4)  In SECTION 1, Subsection (b), Section 20.02 of added

1-36     Chapter 20, Business & Commerce Code (Introduced version page 3,

1-37     line 30) strike "and explaining"

1-38           (5)  In SECTION 1, Section 20.03 of added Chapter 20,

1-39     Business & Commerce Code (Introduced version page 3, lines 61-66),

1-40     strike Subsection (c) and substitute a new Subsection (c) to read

1-41     as follows:

1-42           "(c)  A consumer reporting agency shall provide a copy of the

1-43     consumer report to the consumer on the request of the consumer and

1-44     on evidence of proper identification, as directed by the Fair

1-45     Credit Reporting Act (15 U.S.C. Section 1681 et seq.), as amended,

1-46     and regulations adopted under that Act."

1-47           (6)  In SECTION 1, Subsection (a), Section 20.04 of added

1-48     Chapter 20, Business & Commerce Code (Introduced version page 4,

1-49     lines 2-4), strike "the retail price of a written report rendered

1-50     in the normal course of business to other customers of the agency

1-51     for each request for information" and substitute "$8"

1-52           (7)  In SECTION 1, Section 20.05 of added Chapter 20,

1-53     Business & Commerce Code (Introduced version page 4, lines 52-58),

1-54     strike Subsection (d).

1-55           (8)  In SECTION 1, Subsection (d), Section 20.06 of added

1-56     Chapter 20, Business & Commerce Code (Introduced version page 5,

1-57     line 21), between "and" and "each" insert ", on the request of the

1-58     consumer, to"

1-59                            A BILL TO BE ENTITLED

1-60                                   AN ACT

1-61     relating to the regulation of persons that provide consumer credit

1-62     information to third parties; providing a civil penalty.

1-63           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-64           SECTION 1.  Title 2, Business & Commerce Code, is amended by

 2-1     adding Chapter 20 to read as follows:

 2-2        CHAPTER 20.  REGULATION OF CONSUMER CREDIT REPORTING AGENCIES

 2-3           Sec. 20.01.  DEFINITIONS.  In this chapter:

 2-4                 (1)  "Adverse action" includes:

 2-5                       (A)  the denial of, increase in a charge for, or

 2-6     reduction in the amount of insurance for personal, family, or

 2-7     household purposes;

 2-8                       (B)  the denial of employment or other decision

 2-9     made for employment purposes that adversely affects a current or

2-10     prospective employee; or

2-11                       (C)  an action or determination with respect to a

2-12     consumer's application for credit that is adverse to the consumer's

2-13     interests.

2-14                 (2)  "Consumer" means an individual who resides in this

2-15     state.

2-16                 (3)  "Consumer file" means all of the information about

2-17     a consumer that is recorded and retained by a consumer reporting

2-18     agency regardless of how the information is stored.

2-19                 (4)  "Consumer report" means a communication or other

2-20     information by a consumer reporting agency relating to the credit

2-21     worthiness, credit standing, credit capacity, debts, character,

2-22     general reputation, personal characteristics, or mode of living of

2-23     a consumer that is used or expected to be used or collected, wholly

2-24     or partly, as a factor in establishing the consumer's eligibility

2-25     for credit or insurance for personal, family, or household

2-26     purposes, employment purposes, or other purpose authorized under

2-27     Sections 603 and 604 of the Fair Credit Reporting Act (15 U.S.C.

2-28     Sections 1681a and 1681b), as amended.  The term does not include:

2-29                       (A)  a report containing information solely on a

2-30     transaction between the consumer and the person making the report;

2-31                       (B)  an authorization or approval of a specific

2-32     extension of credit directly or indirectly by the issuer of a

2-33     credit card or similar device; or

2-34                       (C)  a report in which a person who has been

2-35     requested by a third party to make a specific extension of credit

2-36     directly or indirectly to a consumer makes a decision with respect

2-37     to the request, if the third party advises the consumer of the name

2-38     and address of the person to whom the request was made and the

2-39     person makes the disclosures that must be made under Section 615 of

2-40     the Fair Credit Reporting Act (15 U.S.C. Section 1681m), as

2-41     amended, to the consumer in the event of adverse action against the

2-42     consumer.

2-43                 (5)  "Consumer reporting agency" means a person that

2-44     regularly engages wholly or partly in the practice of assembling or

2-45     evaluating consumer credit information or other information on

2-46     consumers to furnish consumer reports to third parties for monetary

2-47     fees, for dues, or on a cooperative nonprofit basis.  The term does

2-48     not include a business entity that provides only check verification

2-49     or check guarantee services.

2-50                 (6)  "Investigative consumer report" means all or part

2-51     of a consumer report in which information on the character, general

2-52     reputation, personal characteristics, or mode of living of a

2-53     consumer is obtained through a personal interview with a neighbor,

2-54     friend, or associate of the consumer or others with whom the

2-55     consumer is acquainted or who may have knowledge concerning any

2-56     such information.  The term does not include specific factual

2-57     information on a consumer's credit record obtained directly from a

2-58     creditor of the consumer or from a consumer reporting agency when

2-59     the information was obtained directly from a creditor of the

2-60     consumer or from the consumer.

2-61           Sec. 20.02.  PERMISSIBLE PURPOSES; PROHIBITION; USE OF

2-62     CONSUMER'S SOCIAL SECURITY NUMBER.  (a)  A consumer reporting

2-63     agency may furnish a consumer report only:

2-64                 (1)  in response to a court order issued by a court

2-65     with proper jurisdiction;

2-66                 (2)  in accordance with the written instructions of the

2-67     consumer to whom the report relates; or

2-68                 (3)  to a person the agency has reason to believe:

2-69                       (A)  intends to use the information in connection

 3-1     with a transaction involving the extension of credit to, or review

 3-2     or collection of an account of, the consumer to whom the report

 3-3     relates;

 3-4                       (B)  intends to use the information for

 3-5     employment purposes only if the consumer consents in writing to the

 3-6     furnishing of the report;

 3-7                       (C)  intends to use the information in connection

 3-8     with the underwriting of insurance involving the consumer only if

 3-9     the consumer consents in writing to the furnishing of the report;

3-10                       (D)  intends to use the information in connection

3-11     with a determination of the consumer's eligibility for a license or

3-12     other benefit granted by a governmental entity required by law to

3-13     consider an applicant's financial responsibility or status;

3-14                       (E)  has a legitimate business need for the

3-15     information in connection with a business transaction involving the

3-16     consumer; or

3-17                       (F)  intends to use the information for any

3-18     purpose authorized under the Fair Credit Reporting Act (15 U.S.C.

3-19     Section 1681 et seq.), as amended, and regulations adopted under

3-20     that Act.

3-21           (b)  A consumer reporting agency may not prohibit a user of a

3-22     consumer report or investigative consumer report from disclosing

3-23     and explaining the contents of the report or providing a copy of

3-24     the report to the consumer to whom it relates at the consumer's

3-25     request if adverse action against the consumer based wholly or

3-26     partly on the report has been taken or is contemplated by the user

3-27     of the report.  A user of a consumer report or a consumer reporting

3-28     agency may not be found liable or otherwise held responsible for a

3-29     disclosed or copied report when acting under this subsection.  The

3-30     disclosure or copy of the report, by itself, does not make a user

3-31     of the report a consumer reporting agency.

3-32           (c)  If a consumer furnishes the consumer's social security

3-33     number to a person for use in obtaining a consumer report, the

3-34     person shall include the consumer's social security number with the

3-35     request for the consumer report and shall include the social

3-36     security number with all future reports of information regarding

3-37     the consumer made by the person to a consumer reporting agency.

3-38           Sec. 20.03.  DISCLOSURES TO CONSUMERS.  (a)  On request and

3-39     proper identification provided by a consumer, a consumer reporting

3-40     agency shall disclose to the consumer in writing all information

3-41     pertaining to the consumer in the consumer reporting agency's files

3-42     at the time of the request, including:

3-43                 (1)  the name of each person requesting credit

3-44     information about the consumer during the preceding six months and

3-45     the date of each request;

3-46                 (2)  a set of instructions describing how information

3-47     is presented on the consumer reporting agency's written disclosure

3-48     of the consumer file; and

3-49                 (3)  a nationwide toll-free number for use in resolving

3-50     a dispute if the consumer submits a written dispute to the consumer

3-51     reporting agency.

3-52           (b)  The information must be disclosed in a clear, accurate

3-53     manner that is understandable to a consumer.

3-54           (c)  A consumer reporting agency annually shall:

3-55                 (1)  notify in writing or by telephone each consumer

3-56     about whom the consumer reporting agency furnished a consumer

3-57     report during the 12 months preceding the date of the notice; and

3-58                 (2)  provide a copy of the consumer report to the

3-59     consumer free of charge.

3-60           Sec. 20.04.  CHARGES FOR CERTAIN DISCLOSURES.  (a)  Except as

3-61     provided by Subsection (b), a consumer reporting agency may impose

3-62     a reasonable charge on a consumer for the disclosure of information

3-63     pertaining to the consumer.  The amount of the charge may not

3-64     exceed the retail price of a written report rendered in the normal

3-65     course of business to other customers of the agency for each

3-66     request for information.

3-67           (b)  A consumer reporting agency may not charge a fee for:

3-68                 (1)  a request by a consumer for a copy of the

3-69     consumer's file made not later than the 60th day after the date on

 4-1     which adverse action is taken against the consumer;

 4-2                 (2)  notification of the deletion of information that

 4-3     is found to be inaccurate or can no longer be verified sent to a

 4-4     person designated by the consumer, as prescribed by Section 611 of

 4-5     the Fair Credit Reporting Act (15 U.S.C. Section 1681i), as

 4-6     amended;

 4-7                 (3)  a set of instructions for understanding the

 4-8     information presented on the consumer report; or

 4-9                 (4)  a toll-free telephone number that consumers may

4-10     call to obtain additional assistance concerning the consumer

4-11     report.

4-12           Sec. 20.05.  REPORTING OF INFORMATION PROHIBITED.

4-13     (a)  Except as provided by Subsection (b), a consumer reporting

4-14     agency may not furnish a consumer report containing information

4-15     related to:

4-16                 (1)  a case under Title 11 of the United States Code or

4-17     under the federal Bankruptcy Act in which the date of entry of the

4-18     order for relief or the date of adjudication predates the consumer

4-19     report by more than 10 years;

4-20                 (2)  a suit or judgment in which the date of entry

4-21     predates the consumer report by more than seven years or the

4-22     governing statute of limitations, whichever is longer;

4-23                 (3)  a tax lien in which the date of payment predates

4-24     the consumer report by more than seven years;

4-25                 (4)  a record of arrest, indictment, or conviction of a

4-26     crime in which the date of disposition, release, or parole predates

4-27     the consumer report by more than seven years; or

4-28                 (5)  another item or event that predates the consumer

4-29     report by more than seven years.

4-30           (b)  A consumer reporting agency may furnish a consumer

4-31     report that contains information described by Subsection (a) if the

4-32     information is provided in connection with:

4-33                 (1)  a credit transaction with a principal amount that

4-34     is or may reasonably be expected to be $150,000 or more;

4-35                 (2)  the underwriting of life insurance for a face

4-36     amount that is or may reasonably be expected to be $150,000 or

4-37     more; or

4-38                 (3)  the employment of a consumer at an annual salary

4-39     that is or may reasonably be expected to be $75,000 or more.

4-40           (c)  A consumer reporting agency may not furnish medical

4-41     information about a consumer in a consumer report that is being

4-42     obtained for employment purposes or in connection with a credit,

4-43     insurance, or direct marketing transaction unless the consumer

4-44     consents to the furnishing of the medical information.

4-45           (d)  A consumer reporting agency shall report information in

4-46     response to a request for credit information about a consumer not

4-47     later than the first anniversary of the date on which the credit

4-48     information is requested.  The consumer reporting agency may retain

4-49     information concerning a request for credit information about a

4-50     consumer in a consumer's file for not more than two years after the

4-51     date on which the credit information is requested.

4-52           Sec. 20.06.  DISPUTE PROCEDURE.  (a)  If the completeness or

4-53     accuracy of information contained in a consumer's file is disputed

4-54     by the consumer and the consumer notifies the consumer reporting

4-55     agency of the dispute, the agency shall reinvestigate the disputed

4-56     information free of charge and record the current status of the

4-57     disputed information not later than the 30th business day after the

4-58     date on which the agency receives the notice.  The consumer

4-59     reporting agency shall provide the consumer with the option of

4-60     notifying the agency of a dispute concerning the consumer's file by

4-61     speaking directly to a representative of the agency.

4-62           (b)  Not later than the fifth business day after the date on

4-63     which a consumer reporting agency receives notice of a dispute from

4-64     a consumer in accordance with Subsection (a), the agency, unless

4-65     otherwise directed by the consumer, shall provide notice of the

4-66     dispute to each person who provided any information related to the

4-67     dispute and each person requesting information about the consumer.

4-68           (c)  A consumer reporting agency may terminate a

4-69     reinvestigation of information disputed by a consumer under

 5-1     Subsection (a) if the agency reasonably determines that the dispute

 5-2     is frivolous or irrelevant.  An agency that terminates a

 5-3     reinvestigation of disputed information under this subsection shall

 5-4     promptly notify the consumer of the termination and the reasons for

 5-5     the termination by mail, or if authorized by the consumer, by

 5-6     telephone.  The presence of contradictory information in a

 5-7     consumer's file does not by itself constitute reasonable grounds

 5-8     for determining that the dispute is frivolous or irrelevant.

 5-9           (d)  If disputed information is found to be inaccurate or

5-10     cannot be verified after a reinvestigation under Subsection (a),

5-11     the consumer reporting agency, unless otherwise directed by the

5-12     consumer, shall promptly delete the information from the consumer's

5-13     file, revise the consumer file, and provide the revised consumer

5-14     report to the consumer and each person who requested the consumer

5-15     report within the preceding six months.  The consumer reporting

5-16     agency may not report the inaccurate or unverified information in

5-17     subsequent reports.

5-18           (e)  Information deleted under Subsection (d) may not be

5-19     reinserted in the consumer's file unless the person who furnishes

5-20     the information to the consumer reporting agency reinvestigates and

5-21     states in writing or by electronic record to the agency that the

5-22     information is complete and accurate.

5-23           (f)  A consumer reporting agency shall provide written notice

5-24     of the results of a reinvestigation or reinsertion made under this

5-25     section not later than the fifth business day after the date on

5-26     which the reinvestigation or reinsertion has been completed.  The

5-27     notice must include:

5-28                 (1)  a statement that the reinvestigation is complete;

5-29                 (2)  a statement of the determination made by the

5-30     agency on the completeness or accuracy of the disputed information;

5-31                 (3)  a copy of the consumer's file or consumer report

5-32     and a description of the results of the reinvestigation;

5-33                 (4)  a statement that a description of the procedure

5-34     used to determine the accuracy and completeness of the information

5-35     shall be provided to the consumer by the agency on request,

5-36     including the name, business address, and, if available, the

5-37     telephone number of each person contacted in connection with the

5-38     information;

5-39                 (5)  a statement that the consumer is entitled to add a

5-40     statement to the consumer's file disputing the accuracy or

5-41     completeness of the information as provided by Section 611 of the

5-42     Fair Credit Reporting Act (15 U.S.C. Section 1681i), as amended;

5-43     and

5-44                 (6)  a statement that the consumer is entitled to

5-45     dispute resolution as prescribed by this section, after the

5-46     consumer receives the notice specified under this subsection.

5-47           (g)  This section does not require a person who obtains a

5-48     consumer report for resale to another person to alter or correct an

5-49     inaccuracy in the consumer report if the report was not assembled

5-50     or prepared by the person.

5-51           Sec. 20.07.  CORRECTION OF INACCURATE INFORMATION.  (a)  A

5-52     consumer reporting agency shall provide a person who provides

5-53     consumer credit information to the agency with the option of

5-54     correcting previously reported inaccurate information by speaking

5-55     directly to a representative of the agency or by submitting the

5-56     correction by facsimile or other automated means.

5-57           (b)  Not later than the fifth day after the date on which the

5-58     consumer reporting agency receives a correction, the agency shall

5-59     correct the consumer's file and notify the consumer of the

5-60     correction.  A consumer reporting agency shall have a method of

5-61     verifying communications made by persons who provide information to

5-62     the agency.

5-63           Sec. 20.08.  CONSUMER'S RIGHT TO FILE ACTION IN COURT OR

5-64     ARBITRATE DISPUTES.  (a)  An action to enforce an obligation of a

5-65     consumer reporting agency to a consumer under this chapter may be

5-66     brought in any court as provided by the Fair Credit Reporting Act

5-67     (15 U.S.C. Section 1681 et seq.), as amended, or may be submitted

5-68     to binding arbitration after the consumer has followed all dispute

5-69     procedures in Section 20.06 and has received the notice specified

 6-1     in Section 20.06(f) in the manner provided by the rules of the

 6-2     American Arbitration Association.

 6-3           (b)  A decision rendered by an arbitrator under this section

 6-4     does not affect the validity of an obligation or debt owed by the

 6-5     consumer to any party.

 6-6           (c)  A prevailing party in an action or arbitration

 6-7     proceeding brought under this section shall be compensated for the

 6-8     party's attorney fees and costs of the proceeding as determined by

 6-9     the court or arbitration.

6-10           (d)  A consumer may not submit to arbitration more than one

6-11     action against a particular consumer reporting agency during any

6-12     120-day period.

6-13           (e)  The results of an arbitration action brought against a

6-14     consumer reporting agency doing business in this state shall be

6-15     communicated in a timely manner to other consumer reporting

6-16     agencies doing business in this state.

6-17           (f)  If a determination is made in favor of a consumer after

6-18     submission of a dispute to arbitration, the disputed adverse

6-19     information in the consumer's file or record shall be removed or

6-20     stricken in a timely manner.  If the adverse information is not

6-21     removed or stricken, the consumer may bring an action against the

6-22     noncomplying agency under this section regardless of the 120-day

6-23     waiting period required under this section.

6-24           Sec. 20.09.  CIVIL LIABILITY.  (a)  A consumer reporting

6-25     agency that wilfully or negligently violates this chapter or the

6-26     Fair Credit Reporting Act (15 U.S.C. Section 1681 et seq.), as

6-27     amended, is liable to the consumer against whom the violation

6-28     occurs for the greater of three times the amount of actual damages

6-29     to the consumer or $1,000, reasonable attorney fees, and court or

6-30     arbitration costs  for each inaccurate entry in the consumer's file

6-31     that was disputed by the consumer.

6-32           (b)  A consumer reporting agency that negligently violates

6-33     this chapter or the Fair Credit Reporting Act (15 U.S.C. Section

6-34     1681 et seq.), as amended, is liable to the consumer against whom

6-35     the violation occurs for actual damages to the consumer or $1,000,

6-36     whichever is greater, for each inaccurate entry in the consumer's

6-37     file that was disputed by the consumer, reasonable attorney fees,

6-38     and court or arbitration costs.  A consumer reporting agency is not

6-39     considered to have negligently violated this chapter or the Fair

6-40     Credit Reporting Act (15 U.S.C. Section 1681 et seq.), as amended,

6-41     if, not later than the 30th day after the date on which the agency

6-42     receives notice of a dispute from a consumer under Section 20.06,

6-43     the agency corrects the complained of item or activity and sends

6-44     the consumer and each person who received the consumer information

6-45     written notification of the corrective action in accordance with

6-46     Section 20.06(f), unless otherwise directed by the consumer.

6-47           (c)  In addition to liability imposed under Subsection (a), a

6-48     consumer reporting agency that does not correct a consumer's file

6-49     and consumer report before the 10th day after the date on which a

6-50     judgment is entered against the agency because of inaccurate

6-51     information contained in a consumer's file is also liable for

6-52     $1,000 a day until the inaccuracy is corrected.

6-53           Sec. 20.10.  REMEDIES CUMULATIVE.  An action taken under this

6-54     chapter does not prohibit a consumer from taking any other action

6-55     authorized by law except that a credit reporting agency may not be

6-56     subject to suit with respect to any issue that was the subject of

6-57     an arbitration proceeding brought under Section 20.08.

6-58           SECTION 2.  This Act takes effect September 1, 1997.

6-59           SECTION 3.  The importance of this legislation and the

6-60     crowded condition of the calendars in both houses create an

6-61     emergency and an imperative public necessity that the

6-62     constitutional rule requiring bills to be read on three several

6-63     days in each house be suspended, and this rule is hereby suspended.

6-64                                  * * * * *