[Federal Register Volume 75, Number 166 (Friday, August 27, 2010)]
[Proposed Rules]
[Pages 52655-52671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21202]
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FEDERAL TRADE COMMISSION
16 CFR Part 698
RIN 3084-AA94
Summary of Rights and Notices of Duties Under the Fair Credit
Reporting Act
AGENCY: Federal Trade Commission
ACTION: Proposed rule; request for comment.
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SUMMARY: Pursuant to its responsibilities under the Fair Credit
Reporting Act, the Federal Trade Commission (Commission or FTC) is
publishing for public comment revised versions of three documents: a
summary of consumer rights, a notice of responsibilities for persons
that furnish information to consumer reporting agencies, and a notice
of responsibilities for persons that obtain consumer reports from
consumer reporting agencies. The Commission is proposing the current
revisions to incorporate changes in rights and obligations created by
several new rules issued pursuant to the Fair and Accurate Credit
Transactions Act of 2003. The Commission is also proposing revisions to
improve the clarity and usefulness of the documents for consumers,
furnishers, and users.
DATES: Comments must be received on or before September 21, 2010.
ADDRESSES: Interested parties are invited to submit written comments
electronically or in paper form by following the instructions in the
SUPPLEMENTARY INFORMATION section below. Comments in electronic form
should be submitted by using the following weblink: (https://ftcpublic.commentworks.com/ftc/fcrarevisednotices) (and following the
instructions on the web-based form). Comments filed in paper form
should be mailed or delivered to the following address: Federal Trade
Commission, Office of the Secretary, Room H-135 (Annex M), 600
Pennsylvania Avenue, NW, Washington, D.C. 20580, in the manner detailed
in the SUPPLEMENTARY INFORMATION section below.
FOR FURTHER INFORMATION CONTACT: Pavneet Singh, Attorney, Division of
Privacy and Identity Protection, Bureau of Consumer Protection, Federal
Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580,
(202) 326-2252.
SUPPLEMENTARY INFORMATION:
I. Background
Under section 609(c) of the Fair Credit Reporting Act (FCRA),
consumer reporting agencies (CRAs) are required to include a summary of
consumer rights with every consumer report they provide to
consumers.\1\ The Commission is required to provide a model summary of
rights (Summary of Rights) to be used for this purpose. In addition,
section 607(d)(2) of the FCRA requires the Commission to prescribe the
content of notices that CRAs must provide to those who furnish
information to them (Furnisher Notice) and to those who obtain consumer
reports from them (User Notice).\2\
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\1\ 15 U.S.C. 1681g(c). Under section 609(a) of the FCRA, 15
U.S.C. 1681g(a), CRAs are required to disclose to consumers the
information in their files upon request. CRAs generally refer to
these disclosures as ``file disclosures'' and provide them in a
different format than the consumer reports they provide to third
parties. For purposes of this notice, the term ``consumer report''
includes a ``file disclosure'' from a CRA to a consumer.
\2\ 15 U.S.C. 1681e(d).
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The Commission originally issued these three documents in 1997.\3\
It issued revised versions in 2004\4\ to reflect changes made to the
FCRA by the Fair and Accurate Credit Transactions Act of 2003 (FACT
Act).\5\ Since then, the Commission and other financial regulators have
finalized new rules under the FACT Act. The Commission is now proposing
a newly revised Summary of Rights, User Notice, and
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Furnisher Notice to reflect these new rules, as explained further
below.\6\ The proposed revised versions are also intended to improve
the clarity and usefulness of the documents for consumers, furnishers,
and users. For comparison, the 2004 versions of these notices can be
found at (www.ftc.gov/opa/2004/11/facta.shtm).
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\3\ 62 FR 35586 (1997).
\4\ 69 FR 69776 (2004).
\5\ Pub. L. 108-159, 117 Stat. 1952 (2003).
\6\ At this time, the Commission is not issuing a revised
version of the identity theft rights summary required by section
609(d) of the FCRA. The Commission is currently undertaking a survey
of identity theft victims who contacted the FTC and expects that
when completed, the results of that survey may influence any future
revisions of the identity theft rights summary. See 73 FR 37457
(2009).
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II. Summary of the Proposed Revised Notices
A. Summary of Rights (Appendix F to 16 CFR 698)
Section 609(c) of the FCRA requires the Commission to issue a model
Summary of Rights, which must include an explanation of (1) the
consumer's right to obtain his or her consumer report; (2) the
frequency and circumstances under which a consumer may receive free
consumer reports under the FCRA; (3) the right of a consumer to dispute
incorrect or outdated information in his or her consumer report; and
(4) the right of a consumer to obtain a credit score.\7\
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\7\ Section 609(c) also requires that CRAs notify consumers that
they may have additional rights under state law and that the FCRA
does not require accurate, current derogatory information to be
removed from consumers' files. Thus, the Commission has also
included this information in its Summary of Rights.
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With respect to a consumer's right to dispute information in his or
her consumer report, on July 1, 2009, the Commission and other federal
regulatory agencies issued the Furnisher Direct Dispute Rule, which
took effect on July 1, 2010. Prior to the effective date of this Rule,
under the FCRA, consumers had a right to dispute the accuracy of
information in their consumer reports only by filing a dispute with a
CRA. Under the Furnisher Direct Dispute Rule, consumers may dispute the
accuracy of information in their consumer report directly with the
furnisher of that information as well as the CRA. The proposed revised
Summary of Rights reflects this additional dispute right. Because it is
difficult to inform consumers fully of their dispute rights in a
summary fashion, the proposed revised Summary of Rights also directs
consumers to the Commission's website for more information about
disputing consumer report errors.\8\
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\8\ The Commission is concurrently updating its consumer
education materials on disputing errors in credit reports to reflect
consumers' new right to dispute inaccurate information directly with
furnishers.
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In addition, the proposed revised Summary of Rights reflects
changes to improve the clarity and readability of the document. The
changes include reordering some of the information provided, as well as
making formatting changes and minor wording changes to certain
sections.
Finally, in order to keep the Summary of Rights sufficiently brief
and to improve its readability, the proposed revised Summary of Rights
deletes certain information that the Commission is not required to
include. The current Summary of Rights incorporates a list of Federal
agencies responsible for enforcing the FCRA, which the CRAs are also
required to provide to consumers with their consumer reports. However,
the FCRA does not require this list to be included in the Summary of
Rights. Accordingly, the Commission proposes not to include this
information in the proposed revised Summary of Rights. Instead, the
Commission proposes to make available on its website a separate
document that lists the Federal agencies responsible for enforcing the
FCRA, along with their addresses, phone numbers, and website addresses,
which can be updated more easily. CRAs may use this document to satisfy
their obligation to provide consumers a list of Federal agencies
responsible for enforcing the FCRA.
B. Furnisher Notice (Appendix G to 16 CFR 698)
The proposed revised Furnisher Notice reflects the new duties of
furnishers set forth in the Furnisher Direct Dispute Rule described
above. It also reflects new duties contained in the Furnisher Accuracy
Rule, which became effective on July 1, 2010. The Rule requires
furnishers to establish policies and procedures to ensure the accuracy
and integrity of the consumer report information they furnish to CRAs,
and to consider the guidelines prescribed by the agencies in
establishing these policies and procedures. In addition, the proposed
revised Furnisher Notice also includes revisions to improve the clarity
and readability of the document.\9\
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\9\ These revisions include deleting citation references to the
relevant sections of the FCRA from the text of the Notice and
placing them in endnotes to make the document easier to read.
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C. User Notice (Appendix H to 16 CFR 698)
The proposed revised User Notice reflects the new duties of users
set forth in several of the rules finalized pursuant to the FACT Act.
First, effective January 1, 2011, the Risk-Based Pricing Rule will
require users of consumer reports to provide risk-based pricing notices
in certain circumstances if they extend credit to a particular consumer
on less favorable terms than those they offer to others. As an
alternative to providing risk-based pricing notices, the Rule permits
such users to provide consumers who apply for credit with a free credit
score and information about their credit score. Second, if a CRA
notifies a user of consumer reports that the address the user provided
about a consumer is different from the address in the consumer report,
the Address Discrepancy Rule, which became effective on January 1,
2008, requires the user to implement reasonable procedures to verify
that the consumer report relates to the correct consumer. Users of
consumer reports that verify the address is accurate, and that
regularly furnish information to the CRA, have additional
responsibilities under the Rule. Finally, the Medical Information
Rules, which became effective on April 1, 2006, prescribe the
circumstances under which creditors may obtain, use, and share medical
information. The proposed revised User Notice has been revised to
reflect all of these obligations, as well as to improve the clarity and
readability of the document.\10\
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\10\ As with the Furnisher Notice, these revisions include
deleting citation references to the relevant sections of the FCRA
from the text of the User Notice and placing them in endnotes.
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III. Request for Comments
The Commission invites comment on all aspects of the proposed
revised Summary of Rights, Furnisher Notice, and User Notice. The
Commission also invites comment from all interested parties on the
following issues:
Summary of Rights (Appendix F)
Has the existing Summary of Rights been effective in
informing consumers about their rights under the FCRA?
Has the Commission included all of the rights that should
be included in the model summary?
Has the Commission clearly and sufficiently described a
consumer's ability to dispute inaccurate consumer report information
with both the furnisher of the information and with the CRA? Is it
useful to provide a reference to the FTC's website for additional
information about disputing such errors?
Is it appropriate to provide information about the Federal
agencies responsible for enforcing the FCRA and the contact information
for these agencies in a separate document, which
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will be made available on the FTC's website?
Are there areas where the understandability of the
proposed revised Summary of Rights could be improved? Are there any
sections for which the language does not accurately convey the
substance of the provision? If so, how could such sections be improved?
The proposed revised Summary of Rights uses the term
``credit report'' to describe a consumer report under the FCRA because
the Commission believes it is the term with which consumers are most
familiar. However, as explained in the proposed revised Summary of
Rights, consumers may obtain reports that contain non-credit
information, such as rental or medical history information. Should an
additional or alternate term be used to describe these types of
reports? Would it be more effective and is it feasible to create a
separate model Summary of Rights to send to consumers who request
reports that contain non-credit information?
Furnisher Notice (Appendix G)
Is the proposed revised Furnisher Notice accurate and easy
to understand? In what ways could it be improved?
The Commission expects that the Furnisher Notice will be
sent to a wide range of entities with varying degrees of legal
sophistication. Are the duties set forth in the proposed notice clear
and understandable? Could the description of the duties be improved?
Does the deletion of the citations to the relevant
sections of the FCRA from the text to the endnotes improve the
readability of the document? Or are the citations necessary for
furnishers to locate and understand their statutory obligations?
User Notice (Appendix H)
The proposed revised User Notice discusses the principal
portions of the FCRA that impose obligations upon those who receive
consumer reports. Should additional information be included in the
notice?
The Commission expects that the User Notice will be sent
to a wide range of users with varying degrees of legal sophistication.
Are the duties set forth in the proposed notice clear and easy to
understand? Could the description of the duties be improved?
Does the deletion of the citations to the relevant
sections of the FCRA from the text to the endnotes improve the
readability of the document? Or are the citations necessary for users
to locate and understand their statutory obligations?
Interested parties are invited to submit written comments
electronically or in paper form. Comments should refer to ``FACTA
Notices, Project No. P105408,'' to facilitate the organization of
comments. Please note that your comment - including your name and your
state - will be placed on the public record of this proceeding,
including on the publicly accessible FTC website, at (http://www.ftc.gov/os/publiccomments.shtm).
Because comments will be made public, they should not include any
sensitive personal information, such as any individual's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. Comments also
should not include any sensitive health information, such as medical
records or other individually identifiable health information. In
addition, comments should not include ``trade secret or any commercial
or financial information which is obtained from any person and which is
privileged or confidential'' as provided in Section 6(f) of the Federal
Trade Commission Act (``FTC Act''), 15 U.S.C. 46(f), and FTC Rule
4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing matter for which
confidential treatment is requested must be filed in paper form, must
be clearly labeled ``Confidential,'' and must comply with FTC Rule
4.9(c).\11\
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\11\ The comment must be accompanied by an explicit request for
confidential treatment, including the factual and legal basis for
the request, and must identify the specific portions of the comment
to be withheld from the public record. The request will be granted
or denied by the Commission's General Counsel, consistent with
applicable law and the public interest. See FTC Rule 4.9(c), 16 CFR
4.9(c).
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Because paper mail addressed to the FTC is subject to delay due to
heightened security screening, please consider submitting your comments
in electronic form. Comments filed in electronic form should be
submitted using the following weblink: (https://ftcpublic.commentworks.com/ftc/fcrarevisednotices) (and following the
instructions on the web-based form). To ensure that the Commission
considers an electronic comment, you must file it on the web-based form
at the weblink (https://ftcpublic.commentworks.com/ftc/fcrarevisednotices). If this Notice appears at (http://www.regulations.gov/search/Regs/home.html#home), you may also file an
electronic comment through that website. The Commission will consider
all comments that regulations.gov forwards to it. You may also visit
the FTC Website at (http://www.ftc.gov) to read the Notice and the news
release describing it.
A comment filed in paper form should include the ``FACTA Notices,
Project No. P105408'' reference both in the text and on the envelope,
and should be mailed or delivered to the following address: Federal
Trade Commission, Office of the Secretary, Room H-135 (Annex M), 600
Pennsylvania Avenue, NW, Washington, D.C. 20580. The FTC is requesting
that any comment filed in paper form be sent by courier or overnight
service, if possible, because U.S. postal mail in the Washington area
and at the Commission is subject to delay due to heightened security
precautions.
The FTC Act and other laws that the Commission administers permit
the collection of public comments to consider and use in this
proceeding as appropriate. The Commission will consider all timely and
responsive public comments that it receives, whether filed in paper or
electronic form. Comments received will be available to the public on
the FTC website, to the extent practicable, at (http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, the FTC makes every
effort to remove home contact information for individuals from the
public comments it receives before placing those comments on the FTC
website. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at (http://www.ftc.gov/ftc/privacy.htm).
IV. Communications by Outside Parties to the Commissioners or Their
Advisors
Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding from any
outside party to any Commissioner or Commissioner's advisor will be
placed on the public record.\12\
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\12\ See 16 CFR 1.26(b)(5).
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V. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (PRA), 44
U.S.C. 3501-3521, the Commission reviewed the summary of rights and the
furnisher and user notices for compliance with the PRA when it issued
them in 1997 and when it revised them in 2004. At both times, the
Commission concluded that the summary and notices consisted of
information that is supplied by the Federal government. Accordingly,
the Commission determined that these notices do not constitute a
``collection of information'' as this term is defined in the
regulations implementing the PRA,
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nor do the financial resources expended in relation to the distribution
of these documents constitute a paperwork burden. See 5 CFR
1320.3(c)(2). The Commission has reviewed the proposed changes to the
current summary and notices. The Commission has concluded, consistent
with its analyses in 1997 and 2004, that the proposed summary and
notices do not fall within the definition of ``collection of
information'' covered by the PRA because they are ``[t]he public
disclosure of information originally supplied by the Federal government
to the recipient for the purpose of disclosure to the public * * *.'' 5
CFR 1320.3(c)(2).
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601--612, requires
that the Commission provide an Initial Regulatory Flexibility Analysis
(IRFA) with any action that may constitute a rule unless the Commission
certifies that the action will not have a significant economic impact
on a substantial number of small entities. See 5 U.S.C. 603--605. The
Commission concludes that the proposed revised Summary of Rights,
Furnisher Notice, and User Notice will not have a significant economic
impact on a substantial number of small entities, as discussed below.
Accordingly, this document serves as notice to the Small Business
Administration of the agency's certification of no effect. To ensure
the accuracy of this certification, however, the Commission requests
comment on whether the proposed revised summary or notices will have a
significant impact on a substantial number of small entities, including
specific information on the number of entities that will be covered by
the proposed rules, the number of these entities that are small, and
the average annual burden for each entity. To assist commenters, the
Commission has prepared the following analysis:
A. Description of the Reasons That Action by the Agency Is Being Taken
The agency has undertaken this proceeding to implement provisions
of the FCRA. Specifically, section 609(c) of the FCRA requires the
Commission to prepare the Summary of Rights for consumers and section
607(d) requires the Commission to issue the Furnisher Notice and User
Notice. All of these documents will be distributed by CRAs.
B. The Proposal's Objectives and Legal Basis
The objective of the Commission's action is the issuance of a
proposed revised Summary of Rights, Furnisher Notice, and User Notice
to educate consumers, furnishers of information to CRAs, and users of
information from CRAs as to their rights or duties under the FCRA. As
noted earlier, the legal bases for the proposed summary and notices are
sections 609(c) and 607(d) of the FCRA, respectively.
C. Small Entities to Which the Proposed Rule Will Apply
The proposed revised Summary of Rights, Furnisher Notice, and User
Notice are to be distributed by CRAs. The consumer reporting industry
is composed primarily of ``nationwide'' CRAs and ``nationwide
specialty'' CRAs, as defined in FCRA sections 603(p) and 603(w),
respectively. The Commission believes that the nationwide and
nationwide specialty CRAs will be responsible for much of the
distribution of the summary and notices. The Commission believes that
none of the nationwide CRAs is a ``small'' entity.\13\ There are,
however, small CRAs associated with the nationwide CRAs, and there are
small, independent CRAs. Based on the membership of the major CRA trade
associations, the Commission believes that the total universe of
entities potentially covered by the requirement to distribute the
summary and notices is between 600 and 1000. The Commission does not
know how many of these entities are ``small.'' The Commission invites
comments on the number of ``small'' entities that will be affected by
its proposal.
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\13\ CRAs subject to the Commission's jurisdiction with annual
receipts of $7 million or less are considered small businesses. A
list of the SBA's size standards for all industries can be found at
(http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf) (last visited June 25, 2010).
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D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
The proposed rule would impose no specific reporting or
recordkeeping requirements. CRAs will be required, however, to
distribute the prescribed summary and notices. The Summary of Rights
will be distributed with each consumer report provided to consumers by
CRAs, and will be distributed to large numbers of consumers each year.
The CRAs will need to distribute the revised Furnisher Notice and User
Notice on a one-time basis to all of the entities that furnish
information to a CRA or use information obtained from a CRA, even if
they were previously sent a prior version of the notices. However, the
Commission does not believe that this requirement will increase in any
significant way the burdens already imposed by the FCRA on CRAs.
Because the Commission is providing the language for the summary and
notices, businesses need not incur legal or other professional costs to
develop any new written material. The cost of training employees, if
any, should be minimal. Moreover, when the Furnisher Notice and User
Notice are distributed electronically, the Commission believes the
distribution costs will be negligible.
E. Duplicative, Overlapping, or Conflicting Federal Rules
The Commission has not identified any other federal statutes,
rules, or policies that would duplicate, overlap, or conflict with the
proposed summary or notices. The Commission invites comment and
information on this issue.
F. Significant Alternatives to the Proposed Rule
In some situations, the Commission has considered adopting a
delayed effective date for small entities subject to new regulation in
order to provide them with additional time to come into compliance. In
this case, however, the Commission proposes not to delay the effective
date because small entities will be given the texts of the proposed
summary and notices to be distributed and will not incur additional
costs in developing them.
The Commission seeks comment and information with regard to (1) the
existence of small business entities for which distribution of the
required Summary of Rights, Furnisher Notices, and User Notices would
have a significant economic impact; and (2) suggested alternative
methods of compliance that, consistent with the statutory requirements,
would reduce the economic impact of the requirements of this proceeding
on these entities. If the comments filed in response to this notice
identify small entities that are significantly affected, as well as
alternative methods of compliance that would reduce the economic impact
on such entities, the Commission will consider the feasibility of such
alternatives.
List of Subjects in 16 CFR Part 698
Fair Credit Reporting Act, Consumer reports, Consumer reporting
agencies, Credit, Trade practices.
Accordingly, pursuant to 15 U.S.C. 1681e and 1681g, the Federal
Trade Commission hereby proposes to amend Part 698, chapter 1, title
16, Code of Federal Regulations, as follows:
1. The authority citation for this part continues to read as
follows:
Authority: 15 U.S.C. 1681e, 1681g, 1681s, and 1681j; 117 Stat.
1952; Pub. L. 108-159,
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sections 151, 153, 211(c) and (d), 213, and 311.
2. Revise Appendices F through H to read as follows:
APPENDIX F TO PART 698-GENERAL SUMMARY OF CONSUMER RIGHTS
The prescribed form for this summary is a disclosure that is
substantially similar to the Commission's model summary with all
information clearly and prominently displayed. A separate list of
federal regulators is available at the Commission's website at
(www.ftc.gov/credit). A summary should accurately reflect changes to
those items that may change over time (e.g., dollar amounts or
telephone numbers) to remain in compliance. Translations of this
summary will be in compliance with the Commission's model, provided
that the translation is accurate and that it is provided in a
language used by the recipient consumer.
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APPENDIX G TO PART 698-NOTICE OF FURNISHER RESPONSIBILITIES
The prescribed form for this disclosure is a separate document
that is substantially similar to the Commission's model notice with
all information clearly and prominently displayed. Consumer
reporting agencies may limit the disclosure to only those items that
they know are relevant to the furnisher that will receive the
notice.
[GRAPHIC] [TIFF OMITTED] TP27AU10.002
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APPENDIX H TO PART 698-NOTICE OF USER RESPONSIBILITIES
The prescribed form for this disclosure is a separate document
that is substantially similar to the Commission's notice with all
information clearly and prominently displayed. Consumer reporting
agencies may limit the disclosure to only those items that they know
are relevant to the user that will receive the notice.
[GRAPHIC] [TIFF OMITTED] TP27AU10.005
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By direction of the Commission.
Donald S. Clark,
Secretary
[FR Doc. 2010-21202 Filed 8-26-10; 7:35 am]
BILLING CODE 6750-01-C