Comprehensive Credit Reporting Enhancement, Disclosure, Innovation, and Transparency Act of 2020

II 116TH CONGRESS 2D SESSION H. R. 3621 IN THE SENATE OF THE UNITED STATES JANUARY 30, 2020 Received AN ACT To amend the Fair Credit Reporting Act to remove adverse information for certain defaulted or delinquent private education loan borrowers who demonstrate a history of loan repayment, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 2 HR 3621 RDS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Comprehensive Credit 2 Reporting Enhancement, Disclosure, Innovation, and 3 Transparency Act of 2020’’ or the ‘‘Comprehensive 4 CREDIT Act of 2020’’. 5 SEC. 2. TABLE OF CONTENTS. 6 The table of contents for this Act is as follows: 7 Sec. 1. Short title. Sec. 2. Table of contents. Sec. 3. Findings. Sec. 4. Effective date. Sec. 5. Discretionary surplus fund. 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 dis- closures. Sec. 105. Right to appeal disputes relating to reinvestigations and investiga- tions. 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 agencies and furnishers. Sec. 109. Inclusion of public record data sources in consumer reports. Sec. 110. Injunctive relief for victims. TITLE II—FREE CREDIT SCORES FOR CONSUMERS Sec. 201. Definitions. Sec. 202. Consumer information on calculation of scores. Sec. 203. Disclosures relating to credit scores and educational credit scores. Sec. 204. Free credit score disclosures and consumer reports. Sec. 205. Provision of consumer reports and credit scores by private edu- cational lenders. Sec. 206. Provision of consumer reports and credit scores by motor vehicle lenders or indirect auto lenders. Sec. 207. Provision of consumer reports and credit scores by residential mort- gage lenders. TITLE III—STUDENT BORROWER CREDIT IMPROVEMENT ACT Sec. 301. Removal of adverse information for certain private education loan borrowers. Sec. 302. Private education loan definitions. VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 3 HR 3621 RDS TITLE IV—CREDIT RESTORATION FOR VICTIMS OF PREDATORY ACTIVITIES AND UNFAIR CONSUMER REPORTING PRACTICES Sec. 401. Adverse credit information. Sec. 402. Expedited removal of fully paid or settled debt from consumer re- ports. Sec. 403. Medical debt collections. Sec. 404. Credit restoration for victims of predatory mortgage lending and serv- icing. Sec. 405. Credit restoration for certain private education loans borrowers. Sec. 406. Financial abuse prevention. Sec. 407. Prohibition of certain factors related to Federal credit restoration or rehabilitation. TITLE V—CLARITY IN CREDIT SCORE FORMATION Sec. 501. Consumer Bureau study and report to Congress on the impact of non-traditional data. Sec. 502. Consumer Bureau oversight of credit scoring models. Sec. 503. Review of changes to credit scoring models. TITLE VI—RESTRICTIONS ON CREDIT CHECKS FOR EMPLOYMENT DECISIONS Sec. 601. Prohibition on the use of credit information for most employment de- cisions. TITLE VII—PROHIBITION ON MISLEADING AND UNFAIR CONSUMER REPORTING PRACTICES Sec. 701. Prohibition on automatic renewals for promotional consumer report- ing and credit scoring products and services. Sec. 702. Prohibition on misleading and deceptive marketing related to the pro- vision of consumer reporting and credit scoring products and services. Sec. 703. Prohibition on excessive direct-to-consumer sales. Sec. 704. Fair access to consumer reporting and credit scoring disclosures for nonnative English speakers and the visually and hearing im- paired. Sec. 705. Comparison shopping for loans without harm to credit standing. Sec. 706. Nationwide consumer reporting agencies registry. Sec. 707. Protection for certain consumers affected by a shutdown. TITLE VIII—PROTECTIONS AGAINST IDENTITY THEFT, FRAUD, OR A RELATED CRIME Sec. 801. Identity theft report definition. Sec. 802. Amendment to protection for files and credit records of protected consumers. Sec. 803. Enhancement to fraud alert protections. Sec. 804. Amendment to security freezes for consumer reports. Sec. 805. Clarification of information to be included with agency disclosures. Sec. 806. Provides access to fraud records for victims. Sec. 807. Required Bureau to set procedures for reporting identity theft, fraud, and other related crime. Sec. 808. Establishes the right to free credit monitoring and identity theft pro- tection services for certain consumers. VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6211 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 4 HR 3621 RDS Sec. 809. Ensures removal of inquiries resulting from identity theft, fraud, or other related crime from consumer reports. TITLE IX—MISCELLANEOUS Sec. 901. Definitions. Sec. 902. Technical correction related to risk-based pricing notices. Sec. 903. FCRA findings and purpose; voids certain contracts not in the public interest. Sec. 904. GAO study on the use of credit in housing determinations. Sec. 905. GAO study on the effects of credit scores impacted by a student bor- rower’s defaulted or delinquent private education loan. Sec. 906. GAO study on consumer reporting agency compliance with consent orders. Sec. 907. Protections for active duty uniformed consumer. Sec. 908. Positive credit reporting permitted. Sec. 909. Sense of Congress. Sec. 910. Cybersecurity supervision and examination of large consumer report- ing agencies. SEC. 3. FINDINGS. 1 Congress finds the following: 2 (1) GENERAL FINDINGS ON CREDIT REPORT- 3 ING.— 4 (A) Consumer reporting agencies 5 (‘‘CRAs’’) are companies that collect, compile, 6 and provide information about consumers in the 7 form of consumer reports for certain permis- 8 sible statutory purposes under the Fair Credit 9 Reporting Act (15 U.S.C. 1681 et seq.) 10 (‘‘FCRA’’). The three largest CRAs in this 11 country are Equifax, TransUnion, and 12 Experian. These CRAs are referred to as na- 13 tionwide CRAs and the reports that they pre- 14 pare are commonly referred to as credit reports. 15 Furnishers, such as creditors, lenders, and debt 16 collection agencies, voluntarily submit informa- 17 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 5 HR 3621 RDS tion to CRAs about their accounts such as the 1 total amount for each loan or credit limit for 2 each credit card and the consumer’s payment 3 history on these products. Reports also include 4 identifying information about a consumer, such 5 as their birthdate, previous mailing addresses, 6 and current and previous employers. 7 (B) In a December 2012 paper, ‘‘Key Di- 8 mensions and Processes in the U.S. Credit Re- 9 porting System: A review for how the nation’s 10 largest credit bureaus manage consumer data’’, 11 the Bureau of Consumer Financial Protection 12 (‘‘Consumer Bureau’’) noted that the three na- 13 tionwide CRAs maintain credit files on approxi- 14 mately 200 million adults and receive informa- 15 tion from about 10,000 furnishers. On a 16 monthly basis, these furnishers provide infor- 17 mation on over 1.3 billion consumer credit ac- 18 counts or other trade lines. 19 (C) The 10 largest institutions furnishing 20 credit information to each of the nationwide 21 CRAs account for more than half of all ac- 22 counts reflected in consumers’ credit files. 23 (D) Consumer reports play an increasingly 24 important role in the lives of American con- 25 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 6 HR 3621 RDS sumers. Most creditors, for example, review 1 these reports to make decisions about whether 2 to extend credit to consumers and what terms 3 and conditions to offer them. As such, informa- 4 tion contained in these reports affects whether 5 a person is able to get a private education loan 6 to pay for college costs, to secure a mortgage 7 loan to buy a home, or to obtain a credit card, 8 as well as the terms and conditions under which 9 consumer credit products or services are offered 10 to them. 11 (E) Credit reports are also increasingly 12 used for many noncredit decisions, including by 13 landlords to determine whether to rent an 14 apartment to a prospective tenant and by em- 15 ployers to decide whether to hire potential job 16 applicants or to offer a promotion to existing 17 employees. 18 (F) CRAs have a statutory obligation to 19 verify independently the accuracy and complete- 20 ness of information included on the reports that 21 they provide. 22 (G) The nationwide CRAs have failed to 23 establish and follow reasonable procedures, as 24 required by existing law, to establish the max- 25 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 7 HR 3621 RDS imum level of accuracy of information contained 1 on consumer reports. Given the repeated fail- 2 ures of these CRAs to comply with accuracy re- 3 quirements on their own, legislation is intended 4 to provide them with detailed guidance improv- 5 ing the accuracy and completeness of informa- 6 tion contained in consumer reports, including 7 procedures, policies, and practices that these 8 CRAs should already be following to ensure full 9 compliance with their existing obligations. 10 (H) The presence of inaccurate or incom- 11 plete information on these reports can result in 12 substantial financial and emotional harm to 13 consumers. Credit reporting errors can lead to 14 the loss of a new employment opportunity or a 15 denial of a promotion in an existing job, stop 16 someone from being able to access credit on fa- 17 vorable terms, prevent a person from obtaining 18 rental housing, or even trigger mental distress. 19 (I) Current industry practices impose an 20 unfair burden of proof on consumers trying to 21 fix errors on their reports. 22 (J) Consumer reports containing inac- 23 curate or incomplete credit information also un- 24 dermine the ability of creditors and lenders to 25 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 8 HR 3621 RDS effectively and accurately underwrite and price 1 credit. 2 (K) Recognizing that credit reporting af- 3 fects the lives of almost all consumers in this 4 country and that the consequences of errors on 5 a consumer report can be catastrophic for a 6 consumer, the Consumer Bureau began accept- 7 ing consumer complaints about credit reporting 8 in October 2012. 9 (L) As of early December 2019, the Con- 10 sumer Bureau has handled approximately 11 391,560 credit reporting complaints about the 12 top three CRAs, making credit reporting con- 13 sistently in the top third most-complained-about 14 subject matter on which the Consumer Bureau 15 accepts consumer complaints. Incorrect infor- 16 mation in reports and frustrations about bur- 17 densome and time-consuming process to dis- 18 puting items is are consistently top reported 19 concerns from consumers. 20 (M) Other common types of credit report- 21 ing complaints submitted to the Consumer Bu- 22 reau related to the improper use of a report, 23 trouble obtaining a report or credit score, 24 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 9 HR 3621 RDS CRAs’ investigations, and credit monitoring or 1 identity protection. 2 (N) In the fall 2019 ‘‘Supervisory High- 3 lights’’, the Consumer Bureau noted that one or 4 more of the largest CRAs continue to struggle 5 to adequately oversee furnishers to ensure that 6 they were adhering to the CRA’s vetting poli- 7 cies and to establish proper procedures to verify 8 public record information. 9 (O) According to the fall 2016 ‘‘Super- 10 visory Highlights’’, Consumer Bureau exam- 11 iners determined that one or more debt collec- 12 tors never investigated indirect disputes that 13 lacked detail or were not accompanied by at- 14 tachments with relevant information from the 15 consumer. Examiners also found that notifica- 16 tions sent to consumers about disputes consid- 17 ered frivolous failed to identify for the con- 18 sumers the type of material that they could pro- 19 vide in order for the debt collector to complete 20 the investigation of the disputed item. 21 (P) A February 2014 Consumer Bureau 22 report titled ‘‘Credit Reporting Complaint 23 Snapshot’’ found that consumers are confused 24 about the extent to which the nationwide CRAs 25 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS 10 HR 3621 RDS are required to provide them with validation 1 and documentation of a debt that appears on 2 their credit report. 3 (Q) As evidence that the current system 4 lacks sufficient market incentives for CRAs to 5 develop more robust procedures to increase the 6 accuracy and completeness of information on 7 credit reports, litigation discovery documented 8 by the National Consumer Law Center 9 (‘‘NCLC’’), as part of a February 2019 report 10 titled ‘‘Automated Injustice Redux: Ten Years 11 after a Key Report, Consumers Are Still Frus- 12 trated Trying to Fix Credit Reporting Errors’’, 13 showed that at least two of the three largest 14 CRAs use quota systems to force employees to 15 process disputes hastily and without the oppor- 16 tunity for conducting meaningful investigations. 17 At least one nationwide CRA only allowed dis- 18 pute resolution staff 5 minutes to handle a con- 19 sumer’s call. Furthermore, these CRAs were 20 found to have awarded bonuses for meeting 21 quotas and punished those who didn’t meet pro- 22 duction numbers with probation. 23 (R) Unlike most other business relation- 24 ships, where consumers can register their satis- 25 VerDate Sep 11 2014 23:00 Jan 04, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3621.RDS H3621 kjohnson on DSK79L0C42PROD with BILLS [Text truncated for display. Full text available on Congress.gov.]