Improving Credit Reporting for All Consumers Act

IB Union Calendar No. 288 116TH CONGRESS 1ST SESSION H. R. 3642 [Report No. 116–363] To amend the Fair Credit Reporting Act to fix the consumer report dispute process, to ban misleading and unfair consumer reporting practices, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 9, 2019 Ms. ADAMS 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 9, 2019] VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 3642 RH A BILL To amend the Fair Credit Reporting Act to fix the consumer report dispute process, to ban misleading and unfair consumer reporting practices, and for other purposes. VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 3642 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 ‘‘Im- 4 proving Credit Reporting for All Consumers Act’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. Sec. 2. Findings. Sec. 3. Effective date. Sec. 4. Consumer Bureau rulemaking. TITLE I—IMPROVEMENTS TO THE DISPUTE PROCESS Sec. 101. Dispute procedures and disclosures relating to reinvestigations. Sec. 102. Consumer awareness of dispute rights. Sec. 103. Maintenance of records by furnishers. Sec. 104. Duties of furnishers relating to dispute procedures, notices, and disclo- sures. Sec. 105. Right to appeal disputes relating to reinvestigations and investigations. Sec. 106. Revised consumer reports. Sec. 107. Indication of dispute by consumers and use of disputed information. Sec. 108. Accuracy and completeness report duties for consumer reporting agen- cies and furnishers. Sec. 109. Inclusion of public record data sources in consumer reports. Sec. 110. Injunctive relief for victims. TITLE II—PROHIBITION ON MISLEADING AND UNFAIR CONSUMER REPORTING PRACTICES Sec. 201. Prohibition on automatic renewals for promotional consumer reporting and credit scoring products and services. Sec. 202. Prohibition on misleading and deceptive marketing related to the provi- sion of consumer reporting and credit scoring products and serv- ices. Sec. 203. Prohibiton on excessive direct-to-consumer sales. Sec. 204. Fair access to consumer reporting and credit scoring disclosures for nonnative English speakers and the visually and hearing im- paired. Sec. 205. Comparison shopping for loans without harm to credit standing. Sec. 206. Nationwide consumer reporting agencies registry. SEC. 2. FINDINGS. 8 Congress finds the following: 9 (1) GENERAL FINDINGS.— 10 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 3642 RH (A) Consumer reporting agencies (‘‘CRAs’’) 1 are companies that collect, compile, and provide 2 information about consumers in the form of con- 3 sumer reports for certain permissible statutory 4 purposes under the Fair Credit Reporting Act 5 (15 U.S.C. 1681 et seq.) (‘‘FCRA’’). The three 6 largest CRAs in this country are Equifax, 7 TransUnion, and Experian. These CRAs are re- 8 ferred to as nationwide CRAs and the reports 9 that they prepare are commonly referred to as 10 credit reports. Furnishers, such as creditors, 11 lenders, and debt collection agencies, voluntarily 12 submit information to CRAs about their ac- 13 counts such as the total amount for each loan or 14 credit limit for each credit card and the con- 15 sumer’s payment history on these products. Re- 16 ports also include identifying information about 17 a consumer, such as their birthdate, previous 18 mailing addresses, and current and previous em- 19 ployers. 20 (B) In a December 2012 paper, ‘‘Key Di- 21 mensions and Processes in the U.S. Credit Re- 22 porting System: A review for how the nation’s 23 largest credit bureaus manage consumer data’’, 24 the Bureau of Consumer Financial Protection 25 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 3642 RH (‘‘Consumer Bureau’’) noted that the three na- 1 tionwide CRAs maintain credit files on approxi- 2 mately 200 million adults and receive informa- 3 tion from about 10,000 furnishers. On a monthly 4 basis, these furnishers provide information on 5 over 1.3 billion consumer credit accounts or other 6 trade lines. 7 (C) The 10 largest institutions furnishing 8 credit information to each of the nationwide 9 CRAs account for more than half of all accounts 10 reflected in consumers’ credit files. 11 (D) Consumer reports play an increasingly 12 important role in the lives of American con- 13 sumers. Most creditors, for example, review these 14 reports to make decisions about whether to ex- 15 tend credit to consumers and what terms and 16 conditions to offer them. As such, information 17 contained in these reports affects whether a per- 18 son is able to get a private education loan to pay 19 for college costs, to secure a mortgage loan to buy 20 a home, or to obtain a credit card, as well as the 21 terms and conditions under which consumer 22 credit products or services are offered to them. 23 (E) Credit reports are also increasingly 24 used for many noncredit decisions, including by 25 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 3642 RH landlords to determine whether to rent an apart- 1 ment to a prospective tenant and by employers 2 to decide whether to hire potential job applicants 3 or to offer a promotion to existing employees. 4 (F) CRAs have a statutory obligation to 5 verify independently the accuracy and complete- 6 ness of information included on the reports that 7 they provide. 8 (G) The nationwide CRAs have failed to es- 9 tablish and follow reasonable procedures, as re- 10 quired by existing law, to establish the max- 11 imum level of accuracy of information contained 12 on consumer reports. Given the repeated failures 13 of these CRAs to comply with accuracy require- 14 ments on their own, legislation is intended to 15 provide them with detailed guidance improving 16 the accuracy and completeness of information 17 contained in consumer reports, including proce- 18 dures, policies, and practices that these CRAs 19 should already be following to ensure full compli- 20 ance with their existing obligations. 21 (H) The presence of inaccurate or incom- 22 plete information on these reports can result in 23 substantial financial and emotional harm to 24 consumers. Credit reporting errors can lead to 25 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 3642 RH the loss of a new employment opportunity or a 1 denial of a promotion in an existing job, stop 2 someone from being able to access credit on fa- 3 vorable terms, prevent a person from obtaining 4 rental housing, or even trigger mental distress. 5 (I) Current industry practices impose an 6 unfair burden of proof on consumers trying to 7 fix errors on their reports. 8 (J) Consumer reports containing inaccurate 9 or incomplete credit information also undermine 10 the ability of creditors and lenders to effectively 11 and accurately underwrite and price credit. 12 (K) Recognizing that credit reporting affects 13 the lives of almost all consumers in this country 14 and that the consequences of errors on a con- 15 sumer report can be catastrophic for a consumer, 16 the Consumer Bureau began accepting consumer 17 complaints about credit reporting in October 18 2012. 19 (L) As of February 2017, the Consumer Bu- 20 reau has handled approximately 185,717 credit 21 reporting complaints, making credit reporting 22 consistently the third most-complained-about 23 subject matter on which the Consumer Bureau 24 accepts consumer complaints. 25 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 3642 RH (M) In the ‘‘Monthly Complaint Report Vol- 1 ume 20’’, released in February 2017, the Con- 2 sumer Bureau noted that 76 percent of credit re- 3 porting complaints involved incorrect informa- 4 tion on reports, with consumers frequently ex- 5 pressing their frustrations about the burdensome 6 and time-consuming process to disputing items. 7 (N) Other common types of credit reporting 8 complaints submitted to the Consumer Bureau 9 related to the improper use of a report, trouble 10 obtaining a report or credit score, CRAs’ inves- 11 tigations, and credit monitoring or identity pro- 12 tection. 13 (O) In the summer 2015 ‘‘Supervisory 14 Highlights’’, the Consumer Bureau noted that 15 one or more of the largest CRAs failed to ade- 16 quately oversee furnishers to ensure that they 17 were adhering to the CRA’s vetting policies and 18 to establish proper procedures to verify public 19 record information. 20 (P) According to the fall 2016 ‘‘Supervisory 21 Highlights’’, Consumer Bureau examiners deter- 22 mined that one or more debt collectors never in- 23 vestigated indirect disputes that lacked detail or 24 were not accompanied by attachments with rel- 25 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 3642 RH evant information from the consumer. Exam- 1 iners also found that notifications sent to con- 2 sumers about disputes considered frivolous failed 3 to identify for the consumers the type of material 4 that they could provide in order for the debt col- 5 lector to complete the investigation of the dis- 6 puted item. 7 (Q) A February 2014 Consumer Bureau re- 8 port titled ‘‘Credit Reporting Complaint Snap- 9 shot’’ found that consumers are confused about 10 the extent to which the nationwide CRAs are re- 11 quired to provide them with validation and doc- 12 umentation of a debt that appears on their credit 13 report. 14 (R) As evidence that the current system 15 lacks sufficient market incentives for CRAs to de- 16 velop more robust procedures to increase the ac- 17 curacy and completeness of information on credit 18 reports, litigation discovery documented by the 19 National Consumer Law Center (‘‘NCLC’’), as 20 part of a January 2009 report titled, ‘‘Auto- 21 mated Injustice: How a Mechanized Dispute Sys- 22 tem Frustrates Consumers Seeking to Fix Errors 23 in Their Credit Reports’’, showed that at least 24 two of the three largest CRAs use quota systems 25 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 3642 RH to force employees to process disputes hastily and 1 without the opportunity for conducting meaning- 2 ful investigations. At least one nationwide CRA 3 only allowed dispute resolution staff five minutes 4 to handle a consumer’s call. Furthermore, these 5 CRAs were found to have awarded bonuses for 6 meeting quotas and punished those who didn’t 7 meet production numbers with probation. 8 (S) Unlike most other business relation- 9 ships, where consumers can register their satis- 10 faction or unhappiness with a particular credit 11 product or service simply by taking their busi- 12 ness elsewhere, consumers have no say in whether 13 their information is included in the CRAs data- 14 bases and limited legal remedies to hold the 15 CRAs accountable for inaccuracies or poor serv- 16 ice. 17 (T) Accordingly, despite the existing statu- 18 tory mandate for CRAs to follow reasonable pro- 19 cedures to assure the maximum possible accuracy 20 of the information whenever they prepare con- 21 sumer reports, numerous studies, the high volume 22 of consumer complaints submitted to the Con- 23 sumer Bureau about incorrect information on 24 consumer reports, and supervisory activities by 25 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 3642 RH the Consumer Bureau demonstrate that CRAs 1 continue to skirt their obligations under the law. 2 (2) INCORRECT INFORMATION ON CONSUMER RE- 3 PORTS.— 4 (A) Consumers are entitled to dispute errors 5 on their consumer reports with either the CRA, 6 who issued the report, or directly with fur- 7 nishers, who supplied the account information to 8 the CRA, and request that mistakes be deleted or 9 removed. Consumers, who believe an investiga- 10 tion has not correctly resolved their dispute, how- 11 ever, have few options, other than requesting that 12 a statement about the dispute be included with 13 their future reports. 14 (B) CRAs have a statutory obligation under 15 the FCRA to perform a reasonable investigation 16 by conducting a substantive and searching in- 17 quiry when a consumer disputes an item on 18 their report. In doing so, CRAs must conduct an 19 independent review about the accuracy of any 20 disputed item and cannot merely rely on a fur- 21 nisher’s ‘‘rubber-stamp’’ verification of the integ- 22 rity of the information they have provided to 23 CRAs. 24 VerDate Sep 11 2014 21:14 Dec 23, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H3642.RH H3642 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 3642 RH (C) The Federal Trade Commission 1 (‘‘FTC’’), in a ‘‘Report to Congress Under Sec- 2 tion 319 of the Fair and Accurate Credit Trans- 3 actions Act of 2003’’ released in December 2012, 4 found that 26 percent of survey participants 5 identified at least one potentially material error 6 on their consumer reports, and 13 percent expe- 7 rienced a change in their credit score once the 8 error was fixed. 9 (D) Consumer Bureau examiners have iden- 10 tified repeated deficiencies with the nationwide 11 CRAs’ information collection. In the summer 12 2015 ‘‘Supervisory Highlights’’ released in June 13 2015, the Consumer Bureau noted continued 14 weaknesses with CRAs’ methods and processes for 15 assuring maximum possible accuracy in their re- 16 ports. Examiners also found, with certain excep- 17 tions, n [Text truncated for display. Full text available on Congress.gov.]