Committee Approves Landmark Identity Theft Legislation 61-3

July 25, 2003

The House Committee on Financial Services approved landmark bipartisan legislation to provide consumers with greater identity theft protections and to establish permanent national credit reporting standards.

H.R. 2622, the Fair and Accurate Credit Transactions Act, [pdf] was approved by a vote of 61-3. The bill would provide consumers with the tools they need to fight identity theft and to ensure the accuracy of their credit reports. Included in the legislation are provisions that would give consumers the right to one free credit report per year and access to their credit scores. The bill also includes provisions that would establish new fraud identification tools and help consumers limit prescreened offers of credit and insurance. It further provides significant new protections of consumers' medical information.

The bipartisan bill was approved by the Subcommittee on Financial Institutions on July 16 by a vote of 41-0.

"Today's vote marks an extraordinary moment for our nation's consumers,"Oxley said. "This landmark legislation strikes the appropriate balance between consumers' access to vibrant credit markets and the protections they need to fight identity theft and to ensure the accuracy of their credit reports."

The legislation is the result of six hearings, nearly 100 witnesses, and months of deliberations by lawmakers. In those hearings, testimony indicated that an expiration of the uniform national consumer protection standards in the Fair Credit Reporting Act would negatively affect consumer access to credit and the economy as a whole. Many witnesses also noted the need for increased protection for consumers against identity theft and other inaccuracies in the credit reporting system. H.R. 2622 specifically addresses concerns arising from those hearings.

"The national uniform credit reporting system has lowered costs and increased choice and convenience for American consumers,"Financial Institutions Subcommittee Chairman Spencer Bachus (AL) said. "But by far the most striking result of our national credit reporting system is the dramatically increased availability of credit - the democratization of credit. Low- and middle-income families are the big winners under the Fair And Accurate Credit Transactions Act.”

Specifically, the bill includes provisions to:

  • Empower consumers to guard against identity theft by increasing the effectiveness of consumer initiated fraud alerts and enabling consumers to block fraudulent information in their personal credit records after filing a police report;
  • Increase consumer awareness of their rights if they believe they may be victims of fraud or identity theft;
  • Improve the accuracy of consumer credit information by discouraging the reintroduction of fraudulent information into the credit reporting system;
  • Expand consumer access to credit information to ensure accuracy by giving consumers the right to request a free credit report annually;
  • Simplify consumers' ability to limit unsolicited offers of credit;
  • Enlist financial institutions' support in fighting identity theft by requiring them to develop procedures to "red flag"identity theft, to investigate certain changes in customer addresses, and to truncate credit and debit card information; and
  • Direct regulators to determine how to increase the prompt investigation and correction of disputed information in a consumer's credit file.

The Committee approved eleven amendments to the legislation:

A manager's amendment offered by Chairman Oxley would:

  • Limit the disclosure of certain medical information in the preparing and dissemination of credit reports;
  • Establish a three-tier system for victims of identity theft to ensure credit is not extended to identity thieves;
  • Prohibit a business from sharing negative information about a consumer if they have received a copy of a police report indicating an illegal transaction; and
  • Order a GAO report on the role of race and gender in the credit granting process.

An amendment offered by Rep. Judy Biggert (IL) would require credit reporting agencies to notify users of consumer reports address discrepancies and direct the federal banking regulators to establish guidance regarding reasonable policies for lenders' use of a consumer reports when an address discrepancy exists.

An amendment offered by Rep. Sue Kelly (NY) would require credit reporting agencies to code information about sensitive medical information.

An amendment offered by Carolyn McCarthy (NY), Rep. Barney Frank (MA), and Rep. Steve LaTourette (OH) would provide consumers with important new rights in correcting inaccurate information on their credit reports. The amendment would also prohibit furnishers of information from forwarding credit reporting agencies to supply information on a consumer if the furnisher has substantial doubts as to its accuracy.

An amendment offered by Rep. Paul Gillmor (OH) would require notification of a consumer in the event that the number of enquiries made with respect to the consumer's report was a key factor that adversely affected a consumer's credit score.

An amendment offered by Rep. Richard Baker (LA) would clarify consumers' ability to obtain one free credit report annually from each of the nationwide consumer credit reporting agencies.

An amendment offered by Rep. Pat Toomey (PA) would require a study by the Treasury Department on the role of technology in fighting identity theft.

An amendment offered by Rep. Gregory Meeks (NY) would require a study by the Federal Reserve of further restrictions on offers of credit or insurance not initiated by consumers.

An amendment offered by Rep. Barbara Lee (CA) would require the Comptroller General to study methods for improving consumers' financial literacy.

An amendment offered by Rep. Julia Carson (IN) would protect consumers' rights to obtain a reinvestigation of a consumer dispute directly through "resellers"of consumer reporting information

An amendment offered by Rep. Carolyn Maloney (NY) would require credit card issuers to disclose risk based pricing practices when making unsolicited offers of credit to consumers.

Source: House Financial Services Committee

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