FACT Act Passes House by Wide Margin; ID Theft Safeguards included

WASHINGTON-The House overwhelmingly approved legislation last week to permanently extend the federal preemptions on credit information sharing in the Fair Credit Reporting Act and tough new laws to help consumers in the fight against identity theft. In a strongly bipartisan 392-30 vote, the House passed the Fair and Accurate Credit Transaction Act (H.R. 2622). The legislation allows consumers to place “fraud alerts” in their credit reports, blocks information resulting from identity theft from being reported in credit reports, provides for consumers to receive one free credit report annually, among other things. The FCRA provisions, which will otherwise sunset at the end of the year, concern credit report sharing among credit bureaus, financial institutions, and affiliates. “Consumers rely on affordable access to credit,” House Financial Services Committee Chairman Mike Oxley (R-Ohio) said. “When identity thieves strike, they take away that access and ruin the lives of their victims. This bill will give those victims the ability to clear their names and realize the dreams they have for their families.” The Fair and Accurate Credit Transaction Act (H.R. 2622) was approved with just three amendments. A manager’s amendment was approved by voice vote to clarify that the legislation does not preempt laws it does not address, gives credit furnishers the right to reject frivolous disputes, and allows federal regulators to develop a reasonable system for distributing credit reports. Congressman Bob Ney (R-Ohio) offered an amendment to establish national standards for providing free credit reports, which was approved 233-189. Finally, committee Ranking Member Barney Frank (D-Mass.) pushed an amendment through (235-186) to ensure regional credit reporting agencies are required to provide free credit reports. The most controversial amendments that were expected to be offered to the FACT Act were withdrawn, including one to carve out an exemption for California’s new privacy law sponsored by Representative Barbara Lee (D-Calif.). However, CUNA Senior Vice President of Government Affairs John McKechnie said he would not be surprised to see this amendment reappear in the Senate. A separate amendment by Congressman Paul Kanjorski (D-Pa.) to sunset the federal preemptions on credit information sharing after nine years failed by a vote of 112-310. The Rules Committee-under its modified open rule, which McKechnie described as unusual-had ruled a total of 17 amendments in order. He postulated that the modified open rule could have been a concession to the Democrats as opposed to having a closed rule to block amendments. General debate was limited to one-half-hour each for Republicans and Democrats and amendments were to be considered under the five-minute rule. In the midst of the debate, McKechnie commented that there was a “strong sentiment among the leadership in both parties to get the bill passed.” He added that the House Republican leadership has set a goal of obtaining at least 350 votes in favor of H.R. 2622 to send a strong message to the Senate to get moving on a bill, which the vote easily exceeded. The bill previously passed the House Financial Services Committee by a vote of 61-3. CUNA Vice President of Legislative Affairs and Senior Legislative Counsel Gary Kohn said, “I’m confident.that the bill will go through the House with a very wide margin.” CUNA President and CEO Dan Mica had sent a letter to all members of the House last week, prior to the vote, urging that they pass H.R. 2622 as it came out of the committee. “Credit unions rely on and use these standards every day to meet the credit needs of their members quickly and effectively,” the letter read. “As of January 1, 2004, if these standards are not reauthorized, the resulting problems for credit unions and their members would include: slower credit approval; higher cost of credit; and less confidence in credit reports. Furthermore, consumers’ personal information would be less accurate and secure in a balkanized, patchwork credit reporting system.” Meanwhile, rumors are swirling about when Senate Banking Committee Chairman Richard Shelby (R-Ala.), a strong privacy proponent, will introduce his much-anticipated bill on the subject and what it will include. NAFCU Director of Legislative and Political Affairs Brad Thaler said that he expected an outline of Shelby’s bill to be released sometime last week, but it had not as of Thursday morning. Kohn emphasized that FCRA reauthorization was one of the items on Senate Majority Leader Bill Frist’s (R-Tenn.) agenda to be completed before the end of the congressional session. While Congress is scheduled to adjourn Oct. 3, Hill observers are making estimates that they will remain in session as far out as early November. Democratic California Senators Barbara Boxer and Dianne Feinstein may try to trip up the FACT Act in the Senate if accommodations are not made for the California privacy law. “I think it is going to have an impact in the debate,” Thaler said. “Whether it ultimately has an impact on the final outcome, I think, is still up in the air, but I think there is going to be a push from the California delegation and consumer advocates that the national standard should try to mirror what was approved in California or at the very least that the California law should be exempted from the preemption that would be in place with the national standard if it goes as proposed.” If the bill does not pass this session, Thaler added that he expects Congress to pass a temporary extension until lawmakers can address it in the second session of the 108th Congress. [email protected]