[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR611.2]

[Page 541-542]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 611_PROHIBITION AGAINST CIRCUMVENTING TREATMENT AS A NATIONWIDE 
CONSUMER REPORTING AGENCY--Table of Contents
 
Sec. 611.2  General prohibition.

    (a) A consumer reporting agency shall not circumvent or evade 
treatment as a ``consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis' as defined under section 
603(p) of the Fair Credit Reporting Act, 15 U.S.C. 1681a(p), by any 
means, including, but not limited to:
    (1) Corporate organization, reorganization, structure, or 
restructuring, including merger, acquisition, dissolution, divestiture, 
or asset sale of a consumer reporting agency; or
    (2) Maintaining or merging public record and credit account 
information in a manner that is substantially equivalent to that 
described in paragraphs (1) and (2) of section 603(p) of the Fair Credit 
Reporting Act, 15 U.S.C. 1681a(p).
    (b) Examples:
    (1) Circumvention through reorganization by data type. XYZ Inc. is a 
consumer reporting agency that compiles and maintains files on consumers 
on a nationwide basis. It restructures its operations so that public 
record information is assembled and maintained only by its corporate 
affiliate, ABC Inc. XYZ continues operating as a consumer reporting 
agency but ceases to comply with the FCRA obligations of a consumer 
reporting agency that compiles and maintains files on consumers on a 
nationwide basis, asserting that it no longer meets the definition found 
in FCRA section 603 (p), because it no longer maintains public record 
information. XYZ's conduct is a circumvention or evasion of treatment as 
a consumer reporting agency that compiles and maintains files on 
consumers on a nationwide basis, and thus violates this section.
    (2) Circumvention through reorganization by regional operations. PDQ 
Inc. is a consumer reporting agency that compiles and maintains files on 
consumers on a nationwide basis. It restructures its operations so that 
corporate affiliates separately assemble and maintain all information on 
consumers residing in each state. PDQ continues to operate as a consumer 
reporting agency but ceases to comply with the FCRA obligations of a 
consumer reporting agency that compiles and maintains files on consumers 
on a nationwide basis, asserting that it no longer meets the definition 
found in FCRA section 603(p), because it no longer operates on a 
nationwide basis. PDQ's conduct is a circumvention or evasion of 
treatment as a consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis, and thus violates this 
section.
    (3) Circumvention by a newly formed entity. Smith Co. is a new 
entrant in the marketplace for consumer reports

[[Page 542]]

that bear on a consumer's credit worthiness, standing and capacity. 
Smith Co. organizes itself into two affiliated companies: Smith Credit 
Co. and Smith Public Records Co. Smith Credit Co. assembles and 
maintains credit account information from persons who furnish that 
information regularly and in the ordinary course of business on 
consumers residing nationwide. Smith Public Records Co. assembles and 
maintains public record information on consumers nationwide. Neither 
Smith Co. nor its affiliated organizations comply with FCRA obligations 
of consumer reporting agencies that compile and maintain files on 
consumers on a nationwide basis. Smith Co.''s conduct is a circumvention 
or evasion of treatment as a consumer reporting agency that compiles and 
maintains files on consumers on a nationwide basis, and thus violates 
this section.
    (4) Bona fide, arms-length transaction with unaffiliated party. 
Foster Ltd. is a consumer reporting agency that compiles and maintains 
files on consumers on a nationwide basis. Foster Ltd. sells its public 
record information business to an unaffiliated company in a bona fide, 
arms-length transaction. Foster Ltd. ceases to assemble, evaluate and 
maintain public record information on consumers residing nationwide, and 
ceases to offer reports containing public record information. Foster 
Ltd.''s conduct is not a circumvention or evasion of treatment as a 
consumer reporting agency that compiles and maintains files on consumers 
on a nationwide basis. Foster Ltd.''s conduct does not violate this 
part.