California law free credit report

Bureaus Resist Providing Free Credit Reports

An amendment to the Fair Credit Reporting Act passed last November allows every consumer in the nation to get a free copy of his or her credit report once a year.

Pretty simple. But nothing is simple when you represent credit bureaus that have resisted for years the idea that they should provide credit reports to consumers and the idea that they should do this without charge. Washington representatives for the credit bureaus are pleading with the Federal Trade Commission for delays in the free credit report requirement. On the other hand nearly 3000 consumers have written to the commission saying, "We want free copies now. That's what the law says."

Actually, the new law allows the FTC, which enforces the credit-reporting act, to consider "the significant demands that may be placed on consumer reporting agencies in providing such [disclosures]" and "appropriate means to ensure that consumer reporting agencies can meet those demands including the efficacy of a system of staggering the availability to consumers of such [disclosures]."

That loophole in the Fair and Accurate Credit Transactions (FACT) Act of 2003 ("FACT Act") allowed the FTC to issue a proposed rule Mar. 16 making consumers eligible for free credit reports on a gradual basis. "Under this plan, consumers will become eligible on the following schedule: Western states (AK, AZ, CA, CO, HI, ID, MT, NV, NM, OR, UT, WA, and WY) will become eligible Dec. 1; Midwestern states (IL, IN, IA, KS, MI, MN, MO, NE, ND, OH, SD, and WI) will become eligible Mar. 1, 2005; Southern states (AL, AR, FL, GA, KY, LA, MI, OK, SC, TN, and TX) will become eligible june 1, 2005; and Eastern states (CT, DE, DC, ME, MD, MA, NH, NJ, NY, NC, PA, RI, VT, VA, and WV), Puerto Rico, and all U.S. territories become eligible Sept. 1, 2005."

The commission staff said, "The transition is intended to protect the nationwide credit bureaus from receiving a volume of free credit report requests beyond their capacity to process, and to ensure that consumers can get timely credit reports for other purposes."

Reflecting the new FACT law, the FTC's proposed rule requires that a centralized source for free credit reports from the three nationwide bureaus be available to consumers through a Web site, a toll-free number, and a postal address.

The Associated Credit Bureaus office in Washington, now called the Consumer Data Industry Association, wants the process to drag into 2006 at the earliest. It says that it can't anticipate the volume of requests and doesn't want to waste money on a system that may be larger than needed or to get battered for building a system that is inadequate. The credit bureaus are trying to get immunity from lawsuits stemming from screw-ups in the centralized source.

A Congressional office estimated that requests, now that there is no charge, would total 231 percent of the current level; it based that figure on the number of requests currently from the seven states that require free credit-report disclosures to consumers. (The credit bureaus have been required to provide free credit reports to many consumers for many years - if they live in those states, which include the populous states of California, Georgia, and New Jersey - or if the individual is unemployed or indigent or victimized by ID theft.)

The FTC also proposes that the credit bureaus be relieved of providing prompt free disclosures when volume is excessive. Volume is inevitably excessive after news articles about credit reporting or about ID theft or hacking or credit inaccuracy. That is precisely when consumer wants prompt access to their credit reports.

A joint statement coordinated by the Consumer Federation of America and US Public Interest Research Group told the FTC, "There is no need for a staggered nationwide roll-out, but if it is done, it should be done more rapidly, with the burden on the credit bureaus to prove the potential need for additional staggering following a one-region test. The FTC could still achieve the primary intent of providing as many American consumers as possible rapid access to free credit reports, while considering the potential, yet heretofore unsubstantiated, unrealized and unproven concerns of the nationwide consumer reporting agencies."

The consumer groups also alerted the FTC to apparent plans by credit bureaus to take the information provided by consumers to prove their identity, to get their own credit reports, and use it to sell additional services or even to rent it to other companies.

They said also that provision must be made to service Spanish-speaking consumers. And the exemption for "extraordinary request volume" is triggered at a "very low threshold." They proposed a consumer-oriented advisory board to oversee the operation.