HOUSE BILL No. 5911

 

March 23, 2006, Introduced by Reps. Caul, Proos, Moore, Pavlov, Emmons, Hansen, Booher, Green, Pearce, Moolenaar, Marleau, Nitz and Baxter and referred to the Committee on Banking and Financial Services.

 

     A bill to require certain consumer reporting agencies to place

 

security freezes on certain consumer credit information; to

 

authorize and limit fees; and to provide remedies.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"consumer credit protection act".

 

     Sec. 3. As used in this act:

 

     (a) "Clear and proper identification" means information

 

generally deemed sufficient to identify an individual.

 

     (b) "Consumer" means an individual who resides in this state.

 

     (c) "Consumer report" means that term as defined in 15 USC

 

1681a(d).

 

     (d) "Consumer reporting agency" means that term as defined in


 

15 USC 1681a(f). The term does not include a check acceptance

 

service that provides check approval and guarantee services to

 

merchants.

 

     (e) "Security freeze" means a notice placed on a consumer

 

report at the request of the consumer that prohibits a consumer

 

reporting agency from releasing the consumer's consumer report or

 

credit score related to extensions of credit without the express

 

authorization of the consumer except in compliance with this act.

 

     Sec. 5. (1) A consumer may place a security freeze on his or

 

her consumer report by making a written request to a consumer

 

reporting agency, sent by certified mail to an address designated

 

by that consumer reporting agency to receive requests under this

 

subsection, that includes clear and proper identification of the

 

consumer. A consumer reporting agency shall place a security freeze

 

on a consumer's consumer report within 10 business days after

 

receiving a written request for the security freeze from the

 

consumer under this subsection.

 

     (2) If a security freeze is in place, a consumer reporting

 

agency shall not release information from a consumer report to a

 

third party without prior express authorization from the consumer.

 

This subsection does not prevent a consumer reporting agency from

 

advising a third party that a security freeze is in effect with

 

respect to the consumer's consumer report.

 

     Sec. 7. (1) Within 10 business days after a consumer reporting

 

agency receives a request for a security freeze under section 5,

 

the consumer reporting agency shall provide the consumer with a

 

unique personal identification number or password that the consumer


 

may use to provide authorization for access to his or her consumer

 

report for a specific period of time. In addition, the consumer

 

reporting agency shall simultaneously provide to the consumer in

 

writing the process for placing, removing, and temporarily lifting

 

a security freeze and the process for allowing access to

 

information from the consumer report while the security freeze is

 

in effect.

 

     (2) A consumer may request in writing a replacement personal

 

identification number or password for purposes of subsection (1).

 

The request must comply with the requirements for requesting a

 

security freeze under section 5. Within 10 business days after a

 

consumer reporting agency receives a request for a replacement

 

personal identification number or password, the consumer reporting

 

agency shall provide the consumer with a new, unique personal

 

identification number or password to be used by the consumer

 

instead of the number or password that was provided under

 

subsection (1).

 

     Sec. 9. If a security freeze is in effect, a consumer

 

reporting agency shall not change a consumer's name, address, date

 

of birth, or social security number in a consumer report without

 

sending a written confirmation of the change to the consumer within

 

30 days after the posting of the change to the consumer report. If

 

the change is an address change, the consumer reporting agency

 

shall send written confirmation to both the new address and the

 

former address. Written confirmation is not required for a

 

technical modification of information in a consumer report,

 

including name and street abbreviations, complete spellings, or


 

transposition of numbers or letters.

 

     Sec. 11. (1) A consumer reporting agency shall remove or

 

temporarily lift a security freeze placed on a consumer report only

 

if 1 of the following applies:

 

     (a) The consumer makes a request under this section and pays

 

any applicable fees under section 13 to the consumer reporting

 

agency at a point of contact designated by that consumer reporting

 

agency.

 

     (b) The consumer report is frozen due to a material

 

misrepresentation of fact by the consumer. If a consumer reporting

 

agency intends to remove a security freeze on a consumer report

 

under this subdivision, the consumer reporting agency shall notify

 

the consumer in writing before removing the security freeze.

 

     (2) If a consumer wishes to allow access to his or her

 

consumer report for a specific period of time while a security

 

freeze is in place, he or she shall contact the consumer reporting

 

agency and request that the consumer reporting agency temporarily

 

lift the security freeze and provide all of the following to the

 

consumer reporting agency:

 

     (a) Clear and proper identification.

 

     (b) The unique personal identification number or password

 

provided by the consumer reporting agency under section 5.

 

     (c) The specific time period that the consumer requests that

 

the consumer reporting agency allow users access to his or her

 

consumer report.

 

     (3) A consumer reporting agency that receives a request from a

 

consumer to temporarily lift a security freeze on his or her


 

consumer report under subsection (2) shall comply with the request

 

within 3 business days after receiving the request. A consumer

 

reporting agency may develop procedures involving the use of

 

telephone, facsimile, the internet, or other electronic media to

 

receive and process a request from a consumer to temporarily lift a

 

security freeze on a consumer report in an expedited manner.

 

     (4) A security freeze shall remain in place until the consumer

 

requests that the consumer reporting agency remove the security

 

freeze. A consumer reporting agency shall remove a security freeze

 

within 3 business days after receiving a request for removal from

 

the consumer and the all of the following information from the

 

consumer:

 

     (a) Clear and proper identification.

 

     (b) The unique personal identification number or password

 

provided by the consumer reporting agency under section 7.

 

     Sec. 13. (1) Subject to subsection (2), a consumer reporting

 

agency may impose a reasonable fee on a consumer for placing,

 

temporarily lifting, or removing a security freeze on a consumer

 

report. The amount of the fee may not exceed $10.00 per request.

 

     (2) A consumer reporting agency may not charge any of the

 

following consumers a fee for placing or removing a security freeze

 

on a consumer report:

 

     (a) A consumer who was a victim of identity theft and who

 

provides the consumer reporting agency upon request with a police

 

report that confirms that the consumer was a victim of identity

 

theft.

 

     (b) A consumer who is 65 years old or older.


 

     Sec. 15. (1) A consumer may bring an action against a person

 

who negligently fails to comply with any requirement imposed under

 

this act with respect to the consumer to recover actual damages

 

sustained by the consumer as a result of the failure, plus

 

reasonable attorney fees and court costs.

 

     (2) A consumer may bring an action against a person who

 

willfully fails to comply with any requirement imposed under this

 

act with respect to the consumer to recover actual damages

 

sustained by the consumer as a result of the failure or damages of

 

not less than $100.00 and not more than $1,000.00, whichever is

 

greater, plus reasonable attorney fees and court costs if the

 

consumer is successful in obtaining any award in the action.

 

     (3) A consumer reporting agency may bring an action against a

 

person who obtains a consumer report or requests a security freeze,

 

the temporary lift of a freeze, or the removal of a freeze from the

 

consumer reporting agency under false pretenses or in an attempt to

 

violate federal or state law to recover actual damages sustained by

 

the consumer reporting agency or $1,000.00, whichever is greater.

 

     (4) If the court in an action described in this section finds

 

that an unsuccessful pleading, motion, or other paper filed in

 

connection with the action was filed in bad faith or for purposes

 

of harassment, the court shall award attorney fees to the

 

prevailing party in an amount the court finds reasonable in

 

relation to the work expended in responding to the pleading,

 

motion, or paper.

 

     Sec. 17. The following entities are not required to place a

 

security freeze on a consumer report:


 

     (a) A consumer reporting agency that acts only as a reseller

 

of credit information by assembling and merging information

 

contained in the database of another consumer reporting agency or

 

multiple consumer reporting agencies and does not maintain a

 

permanent database of credit information from which new consumer

 

reports are produced. However, a consumer reporting agency acting

 

as a reseller shall honor any security freeze placed on a consumer

 

credit report by another consumer reporting agency.

 

     (b) A check services or fraud prevention services company that

 

issues reports on incidents of fraud or authorizations for the

 

purpose of approving or processing negotiable instruments,

 

electronic funds transfers, or similar methods of payments.

 

     (c) A deposit account information service company that issues

 

reports regarding account closures due to fraud, substantial

 

overdrafts, automatic teller machine abuse, or similar negative

 

information regarding a consumer to inquiring financial

 

institutions for use only in reviewing a consumer request for a

 

deposit account at the inquiring financial institution.

 

     Sec. 19. (1) This act does not apply to the use of a consumer

 

report by any of the following:

 

     (a) If the consumer report is used for the purpose of

 

reviewing the account or collecting the financial obligation owing

 

for the account, contract, or negotiable instrument, a person with

 

which a consumer has or had prior to assignment an account or

 

contract or to which the consumer has issued a negotiable

 

instrument; a subsidiary, affiliate, or agent of that person; an

 

assignee of a financial obligation owed by the consumer to that


 

person; or a prospective assignee of a financial obligation owed by

 

the consumer to that person in conjunction with the proposed

 

purchase of the financial obligation.

 

     (b) A subsidiary, affiliate, agent, assignee, or prospective

 

assignee of a person to which access has been granted for purposes

 

of facilitating an extension of credit or other permissible use.

 

     (c) A state or local agency, law enforcement agency, trial

 

court, or private collection agency acting pursuant to a court

 

order, warrant, or subpoena.

 

     (d) A child support agency acting pursuant to part d of title

 

IV of the social security act, 42 USC 651 to 669b.

 

     (e) The state or its agents or assigns acting to investigate

 

fraud, acting to investigate or collect delinquent taxes or unpaid

 

court orders, or acting to fulfill any of its other statutory

 

responsibilities if those responsibilities are consistent with a

 

permissible purpose under 15 USC 1681b.

 

     (f) A person setting or adjusting a rate, adjusting a claim,

 

or underwriting for insurance purposes.

 

     (g) A person using credit information for the purpose of

 

prescreening as provided for by the fair credit reporting act, 15

 

USC 1681 to 1681v.

 

     (h) A person administering a consumer report monitoring

 

subscription service to which the consumer has subscribed.

 

     (i) A person providing a consumer with a copy of his or her

 

consumer report in response to the consumer's request.

 

     (2) As used in this section:

 

     (a) "Account" includes a demand deposit account.


 

     (b) "Reviewing the account" includes activities related to

 

account maintenance, monitoring, credit line increases, and account

 

upgrades and enhancements.

 

     Enacting section 1. This act takes effect January 1, 2007.