Fair and Accurate Credit Transactions Act Signed into Law

By Sarah Borchersen-Keto, CCH Washington Staff Writer

President Bush has signed into law the Fair and Accurate Credit Transactions Act, which permanently reauthorizes the federal preemption of state consumer protection laws with regard to credit reports. The law also provides consumers with new tools to fight identity theft, such as a national fraud alert system, and offers free annual access to credit reports.

House Financial Services Committee chairman Michael Oxley (R-Ohio) called the legislation "job one" for his committee this year.

At a December 4, 2003, signing ceremony, Bush said the measure ensures that "all Americans of every income and background have fair access to credit." Bush cited estimates stating that over the last seven years more than 1 million individuals have obtained new or refinanced mortgages that would have been denied if there had not been a fair national standard.

National Retail Federation President and CEO Tracy Mullin said that without the legislation, "credit would have become harder to obtain, interest rates would have gone up and routine services like instant credit and immediate discounts would have become difficult if not impossible to offer."

Bush also noted that the law confronts the growing problem of identity theft. "With this legislation the federal government is protecting our citizens by taking the offensive against identity theft," Bush said.

Under the new law, consumers will have the right to a free credit report every year, enabling them to review the report for any unauthorized activity which may result from identity theft. The bill also requires that merchants display only the last five digits of a credit card number on store receipts.

Other provisions will permit identity theft victims to make a single call to receive advice and set off a nationwide fraud alert in order to protect their credit standing. Credit reporting agencies that receive fraud alerts from consumers will be obliged to follow procedures to ensure that any future requests are by the actual consumer, and not an identity thief. The law also enables active duty military personnel to place special alerts on their files when they are deployed overseas.

In addition the law requires regulators to devise a list of red flag indicators of identity theft, drawn from the patterns and practices of identity thieves. Regulators will be required to evaluate the use of these indicators in their compliance examinations of financial institutions, and impose fines when disregard of the indicators has resulted in losses to customers.

Meanwhile, Sen. Paul Sarbanes (D-Md.), ranking member of the Senate Banking, Housing and Urban Affairs Committee, told a Consumer Federation of America conference the same day that the issue of financial privacy has not been adequately addressed, and that "industry should be concerned about that."

Sarbanes, just moments before attending the bill signing ceremony, said that while committee chairman Sen. Richard Shelby (R-Ala) was concerned that "something sensible and reasonable" was done within the legislation to address privacy, "I do think privacy remains an issue on the agenda."

Related items:

Senate Votes to Reauthorize Fair Credit Reporting Act

Legislation to Amend Fair Credit Reporting Act Clears House

Congress Likely To Reform National Credit Reporting Systems

Lawmakers Debate Extension of Fair Credit Reporting Act Preemption Provisions

''Identity Theft Has Exploded'': Gov't Review

Posted December 5, 2003.