SENATE BILL No. 833

 

 

October 20, 2005, Introduced by Senator SWITALSKI and referred to the Committee on Banking and Financial Institutions.

 

 

 

     A bill to require certain credit reporting agencies to place

 

security alerts and 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

 

"credit freeze act of 2005."

 

     Sec. 2. As used in this act:

 

     (a) "Clear and proper identification" means information

 

generally deemed sufficient to identify a person.

 

     (b) "Consumer file" means a consumer's credit report and other

 

information shown in the records of a credit reporting agency.

 

     (c) "Credit report" means any written, oral, or other

 

communication of any credit information by a credit reporting

 

agency that operates or maintains a database of consumer credit


 

information bearing on a consumer's creditworthiness, credit

 

standing, or credit capacity.

 

     (d) "Credit reporting agency" means any person who, for

 

monetary fees or dues or on a cooperative nonprofit basis,

 

regularly engages in whole or in part in the practice of assembling

 

or evaluating consumer credit information or other information on

 

consumers for the purpose of furnishing credit reports to third

 

parties and who uses any means or facility of interstate commerce

 

for the purpose of preparing or furnishing credit reports. 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 file

 

at the request of the consumer and that prohibits a credit

 

reporting agency from releasing the consumer's credit report

 

without the express authorization of the consumer except in

 

compliance with this act.

 

     Sec. 3. The following persons are not required to place a

 

security alert or a security freeze on a consumer file under this

 

act:

 

     (a) 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.

 

     (b) 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.

 

     (c) A reseller of credit information that assembles or merges

 

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.

 

     (d) Any database or file that consists solely of any

 

information adverse to the interests of the consumer, including,

 

but not limited to, criminal record information, that is used for

 

fraud prevention or detection, tenant screening, employment

 

screening, or any purpose permitted by section 604 of the fair

 

credit reporting act, 15 USC 1681b.

 

     (e) A person that provides fraud prevention services that

 

include reports on incidents of fraud or reports used primarily in

 

the detection or prevention of fraud, but only with respect to

 

those services.

 

     (f) A state or nationally chartered bank or a state or

 

federally chartered savings and loan association, savings bank, or

 

credit union.

 

     Sec. 4. (1) A consumer may place a security freeze on his or

 

her consumer file by written request, sent by certified mail, that

 

includes clear and proper identification of the consumer, to a

 

credit reporting agency. A credit reporting agency shall place a

 

security freeze on a consumer's consumer file 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 credit reporting

 

agency shall not release information from a consumer file to a

 

third party without prior express authorization from the consumer.

 

This subsection does not prevent a credit reporting agency from

 

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

 

respect to the consumer's consumer file.

 

     Sec. 5. (1) Within 10 business days after a credit reporting

 

agency receives a request for a security freeze under section 4,

 

the credit 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

 

file for a specific period of time. In addition, the credit

 

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 file 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 4. Within 7 business days after a

 

credit reporting agency receives a request for a replacement

 

personal identification number or password, the credit 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. 6. (1) A credit reporting agency shall notify a person

 

who requests a credit report if a security freeze is in effect for

 

the consumer file involved in that credit report.

 

     (2) If a third party requests access to a consumer's credit

 

report while a security freeze is in effect, the request is in

 

connection with an application for credit or any other use, and the

 

consumer does not allow access to his or her credit report while

 

the security freeze is in effect, the third party shall treat the

 

application as incomplete.

 

     (3) If a security freeze is in effect, a credit reporting

 

agency shall not change any of the following official information

 

in a consumer's credit report without sending a written

 

confirmation of the change to the consumer within 30 days after the

 

posting of the change to the consumer's file: name, date of birth,

 

social security number, or address. If the change is an address

 

change, the credit 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 a

 

consumer's official information, including name and street

 

abbreviations, complete spellings, or transposition of numbers or

 

letters.

 

     Sec. 7. (1) A credit reporting agency shall remove or

 

temporarily lift a security freeze placed on a consumer file only

 

if 1 of the following applies:

 

     (a) The consumer makes a request under this section.

 

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

 

misrepresentation of fact by the consumer. If a credit reporting


 

agency intends to remove a security freeze on a consumer file under

 

this subdivision, the credit 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 file for a specific period of time while a security freeze

 

is in place, he or she shall contact the credit reporting agency

 

and request that the credit reporting agency temporarily lift the

 

security freeze and provide all of the following to the credit

 

reporting agency:

 

     (a) Clear and proper identification.

 

     (b) The unique personal identification number or password

 

provided by the credit reporting agency under section 5.

 

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

 

the credit reporting agency allow users access to his or her

 

consumer file.

 

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

 

consumer to temporarily lift a security freeze on his or her

 

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

 

within 3 business days after receiving the request. A credit

 

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 file in an expedited manner.

 

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

 

requests that the credit reporting agency remove the security

 

freeze. A credit reporting agency shall remove a security freeze

 

within 3 business days after receiving a request for removal from


 

the consumer and all of the following information from the

 

consumer:

 

     (a) Clear and proper identification.

 

     (b) The unique personal identification number or password

 

provided by the credit reporting agency under section 5.

 

     Sec. 8. A security freeze does not apply to a credit report

 

provided to any of the following:

 

     (a) To a law enforcement agency, court, or other federal,

 

state, or local governmental entity or an agent or assignee of that

 

agency.

 

     (b) If provided for the sole purpose of assisting in the

 

collection of an existing debt of the consumer who is the subject

 

of the credit report requested, to a private collection agency.

 

     (c) If provided for the purpose of reviewing an account or

 

collecting a financial obligation owed for an account, contract, or

 

negotiable instrument, to a person; to a subsidiary, affiliate, or

 

agent of that person; or to an assignee of a financial obligation a

 

consumer owes that person, or a prospective assignee of a financial

 

obligation a consumer owes that person in conjunction with a

 

proposed purchase of that financial obligation, if the consumer has

 

or had before the assignment an account or contract, including a

 

demand deposit account, with that person or had issued a negotiable

 

instrument to that person. As used in this subdivision, "reviewing

 

the account" includes activities related to account maintenance,

 

monitoring, credit line increases, and account upgrades and

 

enhancements.

 

     (d) If provided to facilitate an extension of credit, to a


 

subsidiary, affiliate, agent, assignee, or prospective assignee of

 

a person given access to a credit report by a consumer under

 

section 7(2).

 

     (e) To a person for the purpose of prescreening under the fair

 

credit reporting act, 15 USC 1681 to 1681v.

 

     (f) To a credit reporting agency for the purpose of providing

 

a consumer with a copy of his or her own credit report at his or

 

her request.

 

     (g) To a child support enforcement agency.

 

     (h) To a credit reporting agency that acts only as a reseller

 

of credit information by assembling and merging information

 

contained in the database of another credit reporting agency or

 

multiple credit reporting agencies and does not maintain a

 

permanent database of credit information from which new credit

 

reports are produced. However, a credit reporting agency acting as

 

a reseller shall honor any security freeze placed on a credit

 

report by another credit reporting agency.

 

     (i) To 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 payment.

 

     (j) To 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 banks or other

 

financial institutions for use only in reviewing a consumer request

 

for a deposit account at the inquiring bank or financial


 

institution.

 

     Sec. 9. (1) Subject to subsection (4), a credit reporting

 

agency may impose a reasonable fee on a consumer for initially

 

placing a security freeze on a consumer file. The amount of the fee

 

may not exceed $10.00.

 

     (2) A credit reporting agency may impose a reasonable fee on a

 

consumer to temporarily lift a security freeze on a consumer file.

 

The amount of the fee may not exceed $8.00 per request.

 

     (3) A credit reporting agency may not charge a consumer a fee

 

for revoking a security freeze.

 

     (4) A credit reporting agency may not charge any of the

 

following consumers a fee for placing a security freeze on a

 

consumer file:

 

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

 

provides the credit reporting agency upon request with a police

 

report that confirms that he or she has reported the identity

 

theft.

 

     (b) A consumer who is 62 years old or older.

 

     Sec. 10. A consumer damaged by an intentional or negligent

 

violation of this act may bring an action for and is entitled to

 

recover his or her actual damages, plus reasonable attorney fees

 

and court costs.