Changes to Consumer Credit Laws

A few years ago, Congress passed a law called the Fair and Accurate Credit Transactions Act of 2003, or the FACT Act. This law extends some of the consumer protection measures established by the Fair Credit Reporting Act (FCRA), the main law dealing with consumer credit rights. The FACT Act has as some of its goals to prevent identity theft, improve the resolution of consumer disputes, improve the accuracy of consumer records, and improve consumer access to credit information. Let’s look at the act and some of its provisions.

Identity Theft

There are only a few ways that FACT aims to prevent identity theft from occurring. These include allowing military personnel to place blocks on their accounts while serving overseas and forbidding merchants to print the credit and debit numbers on receipts. This last one will have minimal impact, since most merchants have been printing only the last several digits on receipts for years now.

The FACT Act does include a number of provisions to assist consumers in dealing with identity theft once it happens:

It simplifies the requirements for you to report suspected identity theft or fraud

It requires credit bureaus receiving a consumer fraud or identity theft complaint to share the information with the other major bureaus, so you do not need to contact each one individually

When an identity theft report is made, the credit bureau is required to inform you that you have the right to receive two free credit reports in the 12 months following the date of the incident report

Automatically exempts consumers who file identity theft reports from having your names sold to third parties soliciting them for credit or insurance for a period of 5 years

Places a requirement for verification on any new requests for credit, additional cards or raising of credit limits for anyone filing an identity theft report

When you report that you may be the victim of identity theft or fraud, an initial block is placed on your account for 90 days. Once you have confirmed that the identity theft has in fact taken place by providing the credit bureau with a copy of a police report, the bureau will extend the block.

Resolving Consumer Disputes and Ensuring Accuracy of Records

Previously, under FCRA, consumers were told to dispute inaccurate information with the credit bureaus, rather than with the actual creditors. You had the option to contact the creditor, but there were no formal investigation requirements placed on the creditor to handle your dispute, unless you took them to court and a judge ordered the creditor to investigate.

Now, you can contact the creditor directly for investigation of erroneous information, and they are obligated to investigate within the same timeframe given to the credit bureaus (45 days after you make the request if you are using a free credit report, and 30-45 days for all other types of investigations, like if you have been denied credit). If they find that they made a mistake, they must correct the information with each credit bureau to which they have previously reported the item.

**Note** Creditors are not required to investigate disputes from credit repair firms or to any disputes they deem as “frivolous.” If they consider your dispute to be frivolous, they must send you a letter explaining why, and telling you what information they need to prove that the dispute merits investigation.

Any financial institution that sends a negative report to the credit bureau about you is now required to send you a written notice that they have done so.

Access to Your Credit Information

All consumers now have the right to one free annual credit report from each of the major credit bureaus. Previously, only some states mandated free access to credit reports, and now everyone in the US has this right; just go to www.annualcreditreport.com to order yours. In addition, specialty credit reporting agencies, which collect information regarding landlord-tenant, employment, and insurance issues are now also required to provide you with a free credit report once a year.

Mortgage lenders must now provide credit scores to mortgage applicants along with tips on how to raise your score, at no charge to the consumer.

The USA PATRIOT Act, whose main purpose is to prevent terrorism, also affects your access to certain credit information, by making it more easily available to the government and by keeping the government’s access to your information secret from you. Previously, the FBI had access to your credit reports, and now, any government agency can access them and you will never know.