Restoring Unfairly Impaired Credit and Protecting Consumers Act

IB Union Calendar No. 287 116TH CONGRESS 1ST SESSION H. R. 3622 [Report No. 116–362] To amend the Fair Credit Reporting act to restore the impaired credit of victims of predatory activities and unfair consumer reporting practices, to expand access to tools to protect vulnerable consumers from identity theft, fraud, or a related crime, and protect victims from further harm, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 5, 2019 Ms. TLAIB introduced the following bill; which was referred to the Committee on Financial Services DECEMBER 23, 2019 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on July 5, 2019] VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 3622 RH A BILL To amend the Fair Credit Reporting act to restore the im- paired credit of victims of predatory activities and unfair consumer reporting practices, to expand access to tools to protect vulnerable consumers from identity theft, fraud, or a related crime, and protect victims from fur- ther harm, and for other purposes. VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 3622 RH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the ‘‘Re- 4 storing Unfairly Impaired Credit and Protecting Con- 5 sumers Act’’. 6 (b) TABLE OF CONTENTS.—The table of contents for 7 this Act is as follows: 8 Sec. 1. Short title; table of contents. Sec. 2. Findings. Sec. 3. Effective date. Sec. 4. General Bureau rulemaking. TITLE I—RESTORING THE IMPAIRED CREDIT OF VICTIMS OF PREDATORY ACTIVITIES AND UNFAIR CONSUMER REPORTING PRACTICES Sec. 101. Shortens the time period that most adverse credit information stays on consumer reports. Sec. 102. Mandates the expedited removal of fully paid or settled debt from con- sumer reports. Sec. 103. Imposes restrictions on the appearance of medical collections on con- sumer reports and requires the expedited removal of fully paid or settled medical collections from consumer reports. Sec. 104. Provides credit restoration for victims of predatory mortgage lending and servicing. Sec. 105. Provides credit relief for private education loans borrowers who were de- frauded or mislead by proprietary education institution or ca- reer education programs. Sec. 106. Establishes right for victims of financial abuse to have adverse informa- tion associated with an abuser’s fraudulent activity removed from their consumer reports. Sec. 107. Prohibits treatment of credit restoration or rehabilitation as adverse in- formation. TITLE II—EXPANDING ACCESS TO TOOLS TO PROTECT VULNER- ABLE CONSUMERS FROM IDENTITY THEFT, FRAUD, OR A RE- LATED CRIME, AND PROTECT VICTIMS FROM FURTHER HARM Sec. 201. Identity theft report definition. Sec. 202. Amendment to protection for files and credit records of protected con- sumers. Sec. 203. Enhances fraud alert protections. Sec. 204. Amendment to security freezes for consumer reports. Sec. 205. Clarification of information to be included with agency disclosures. Sec. 206. Provides access to fraud records for victims. VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6213 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 3622 RH Sec. 207. Required Bureau to set procedures for reporting identity theft, fraud, and other related crime. Sec. 208. Establishes the right to free credit monitoring and identity theft protec- tion services for certain consumers. Sec. 209. Ensures removal of inquiries resulting from identity theft, fraud, or other related crime from consumer reports. TITLE III—MISCELLANEOUS Sec. 301. Definitions. Sec. 302. Technical correction related to risk-based pricing notices. Sec. 303. FCRA findings and purpose; voids certain contracts not in the public interest. SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) GENERAL FINDINGS.— 3 (A) Consumer reporting agencies (‘‘CRAs’’) 4 are companies that collect, compile, and provide 5 information about consumers in the form of con- 6 sumer reports for certain permissible statutory 7 purposes under the Fair Credit Reporting Act 8 (15 U.S.C. 1681 et seq.) (‘‘FCRA’’). The three 9 largest CRAs in this country are Equifax, 10 TransUnion, and Experian. These CRAs are re- 11 ferred to as nationwide CRAs and the reports 12 that they prepare are commonly referred to as 13 credit reports. Furnishers, such as creditors, 14 lenders, and debt collection agencies, voluntarily 15 submit information to CRAs about their ac- 16 counts such as the total amount for each loan or 17 credit limit for each credit card and the con- 18 sumer’s payment history on these products. Re- 19 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 3622 RH ports also include identifying information about 1 a consumer, such as their birthdate, previous 2 mailing addresses, and current and previous em- 3 ployers. 4 (B) In a December 2012 paper, ‘‘Key Di- 5 mensions and Processes in the U.S. Credit Re- 6 porting System: A review for how the nation’s 7 largest credit bureaus manage consumer data’’, 8 the Bureau of Consumer Financial Protection 9 (‘‘Consumer Bureau’’) noted that the three na- 10 tionwide CRAs maintain credit files on approxi- 11 mately 200 million adults and receive informa- 12 tion from about 10,000 furnishers. On a monthly 13 basis, these furnishers provide information on 14 over 1.3 billion consumer credit accounts or other 15 trade lines. 16 (C) The 10 largest institutions furnishing 17 credit information to each of the nationwide 18 CRAs account for more than half of all accounts 19 reflected in consumers’ credit files. 20 (D) Consumer reports play an increasingly 21 important role in the lives of American con- 22 sumers. Most creditors, for example, review these 23 reports to make decisions about whether to ex- 24 tend credit to consumers and what terms and 25 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 3622 RH conditions to offer them. As such, information 1 contained in these reports affects whether a per- 2 son is able to get a private education loan to pay 3 for college costs, to secure a mortgage loan to buy 4 a home, or to obtain a credit card, as well as the 5 terms and conditions under which consumer 6 credit products or services are offered to them. 7 (E) Credit reports are also increasingly 8 used for many noncredit decisions, including by 9 landlords to determine whether to rent an apart- 10 ment to a prospective tenant and by employers 11 to decide whether to hire potential job applicants 12 or to offer a promotion to existing employees. 13 (F) CRAs have a statutory obligation to 14 verify independently the accuracy and complete- 15 ness of information included on the reports that 16 they provide. 17 (G) The nationwide CRAs have failed to es- 18 tablish and follow reasonable procedures, as re- 19 quired by existing law, to establish the max- 20 imum level of accuracy of information contained 21 on consumer reports. Given the repeated failures 22 of these CRAs to comply with accuracy require- 23 ments on their own, legislation is intended to 24 provide them with detailed guidance improving 25 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 3622 RH the accuracy and completeness of information 1 contained in consumer reports, including proce- 2 dures, policies, and practices that these CRAs 3 should already be following to ensure full compli- 4 ance with their existing obligations. 5 (H) The presence of inaccurate or incom- 6 plete information on these reports can result in 7 substantial financial and emotional harm to 8 consumers. Credit reporting errors can lead to 9 the loss of a new employment opportunity or a 10 denial of a promotion in an existing job, stop 11 someone from being able to access credit on fa- 12 vorable terms, prevent a person from obtaining 13 rental housing, or even trigger mental distress. 14 (I) Current industry practices impose an 15 unfair burden of proof on consumers trying to 16 fix errors on their reports. 17 (J) Consumer reports containing inaccurate 18 or incomplete credit information also undermine 19 the ability of creditors and lenders to effectively 20 and accurately underwrite and price credit. 21 (K) Recognizing that credit reporting affects 22 the lives of almost all consumers in this country 23 and that the consequences of errors on a con- 24 sumer report can be catastrophic for a consumer, 25 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 3622 RH the Consumer Bureau began accepting consumer 1 complaints about credit reporting in October 2 2012. 3 (L) As of February 2017, the Consumer Bu- 4 reau has handled approximately 185,717 credit 5 reporting complaints, making credit reporting 6 consistently the third most-complained-about 7 subject matter on which the Consumer Bureau 8 accepts consumer complaints. 9 (M) In the ‘‘Monthly Complaint Report Vol- 10 ume 20’’, released in February 2017, the Con- 11 sumer Bureau noted that 76 percent of credit re- 12 porting complaints involved incorrect informa- 13 tion on reports, with consumers frequently ex- 14 pressing their frustrations about the burdensome 15 and time-consuming process to disputing items. 16 (N) Other common types of credit reporting 17 complaints submitted to the Consumer Bureau 18 related to the improper use of a report, trouble 19 obtaining a report or credit score, CRAs’ inves- 20 tigations, and credit monitoring or identity pro- 21 tection. 22 (O) In the summer 2015 ‘‘Supervisory 23 Highlights’’, the Consumer Bureau noted that 24 one or more of the largest CRAs failed to ade- 25 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 3622 RH quately oversee furnishers to ensure that they 1 were adhering to the CRA’s vetting policies and 2 to establish proper procedures to verify public 3 record information. 4 (P) According to the fall 2016 ‘‘Supervisory 5 Highlights’’, Consumer Bureau examiners deter- 6 mined that one or more debt collectors never in- 7 vestigated indirect disputes that lacked detail or 8 were not accompanied by attachments with rel- 9 evant information from the consumer. Exam- 10 iners also found that notifications sent to con- 11 sumers about disputes considered frivolous failed 12 to identify for the consumers the type of material 13 that they could provide in order for the debt col- 14 lector to complete the investigation of the dis- 15 puted item. 16 (Q) A February 2014 Consumer Bureau re- 17 port titled ‘‘Credit Reporting Complaint Snap- 18 shot’’ found that consumers are confused about 19 the extent to which the nationwide CRAs are re- 20 quired to provide them with validation and doc- 21 umentation of a debt that appears on their credit 22 report. 23 (R) As evidence that the current system 24 lacks sufficient market incentives for CRAs to de- 25 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 3622 RH velop more robust procedures to increase the ac- 1 curacy and completeness of information on credit 2 reports, litigation discovery documented by the 3 National Consumer Law Center (‘‘NCLC’’), as 4 part of a January 2009 report titled, ‘‘Auto- 5 mated Injustice: How a Mechanized Dispute Sys- 6 tem Frustrates Consumers Seeking to Fix Errors 7 in Their Credit Reports’’, showed that at least 8 two of the three largest CRAs use quota systems 9 to force employees to process disputes hastily and 10 without the opportunity for conducting meaning- 11 ful investigations. At least one nationwide CRA 12 only allowed dispute resolution staff five minutes 13 to handle a consumer’s call. Furthermore, these 14 CRAs were found to have awarded bonuses for 15 meeting quotas and punished those who didn’t 16 meet production numbers with probation. 17 (S) Unlike most other business relation- 18 ships, where consumers can register their satis- 19 faction or unhappiness with a particular credit 20 product or service simply by taking their busi- 21 ness elsewhere, consumers have no say in whether 22 their information is included in the CRAs data- 23 bases and limited legal remedies to hold the 24 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 3622 RH CRAs accountable for inaccuracies or poor serv- 1 ice. 2 (T) Accordingly, despite the existing statu- 3 tory mandate for CRAs to follow reasonable pro- 4 cedures to assure the maximum possible accuracy 5 of the information whenever they prepare con- 6 sumer reports, numerous studies, the high volume 7 of consumer complaints submitted to the Con- 8 sumer Bureau about incorrect information on 9 consumer reports, and supervisory activities by 10 the Consumer Bureau demonstrate that CRAs 11 continue to skirt their obligations under the law. 12 (2) PRIVATE EDUCATION LOANS.— 13 (A) The Consumer Bureau’s October 2014 14 report titled ‘‘Annual Report of the CFPB Stu- 15 dent Loan Ombudsman’’ noted many private 16 education loan borrowers, who sought to nego- 17 tiate a modified repayment plan when they were 18 experiencing a period of financial distress, were 19 unable to get assistance from their loan holders, 20 which often resulting in them defaulting on their 21 loans. This pattern resembles the difficulty that 22 a significant number of mortgage loan borrowers 23 experienced when they sought to take responsible 24 VerDate Sep 11 2014 21:13 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H3622.RH H3622 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 3622 RH steps to work with their mortgage loan servicer 1 to avoid foreclosure during the Great Recession. 2 (B) Although private student loan holders 3 may allow a borrower to pos [Text truncated for display. Full text available on Congress.gov.]