Report Title:

Relating to consumer credit reporting agencies.

Description:

Allows the victims of identity theft to place a "security freeze" on their credit reports without the consumer's express consent.

HOUSE OF REPRESENTATIVES

H.B. NO.

655

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO CONSUMER CREDIT REPORTING AGENCIES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. This Act shall be known as the "Identity Theft Protection Act of 2005."

SECTION 2. The Hawaii Revised Statutes is amended by adding to title 26 a new chapter to be appropriately designated and to read as follows:

"CHAPTER

CONSUMER CREDIT REPORTING AGENCIES

-1 Purpose. The Federal Trade Commission recently determined that between October 1998 and September 2003, more than 27.3 million Americans have been victims of identity theft, resulting in billions of dollars of losses to consumers. The purpose of this chapter is to protect Hawaii consumers who are victims of identity theft by allowing them to place a security freeze on their credit reports. This security freeze will prohibit a credit reporting agency from releasing any information to unauthorized parties without the consumer's expressed consent and provide consumers more control over who has access to their credit report. This chapter will effectively prevent identity thieves from continuing to secure credit in a victim's name.

-2 Definitions. When used in this chapter, unless the context otherwise requires:

"Credit report" means any written, oral, or other communication of any credit information by a credit reporting agency, as defined in the federal Fair Credit Reporting Act, which operates or maintains a database of consumer credit information bearing on a consumer's credit worthiness, credit standing, or credit capacity.

"Credit reporting agency" means any person who, for monetary fees, 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 consumer credit reports to third parties, but does not include any governmental agency whose records are maintained primarily for law enforcement or licensing purposes.

"Identity theft" means the unauthorized use of another person's identifying information to obtain credit, goods, services, money, or property.

"Security freeze" means a notice placed in a credit report, at the request of the consumer who is a victim of identity theft.

-3 Security freeze by credit reporting agency. (a) A consumer who has been the victim of identity theft may place a security freeze on the consumer's credit report by making a request in writing by certified mail to a credit reporting agency with a valid copy of a police report, investigative report, or complaint the consumer has filed with a law enforcement agency about unlawful use of the consumer's personal information by another person. A credit reporting agency shall not charge a fee for placing or removing a security freeze on a credit report. A security freeze shall prohibit the credit reporting agency from releasing the consumer's credit report or any information from it without the express authorization of the consumer. When a security freeze is in place, information from a consumer's credit report shall not be released 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 credit report.

(b) A credit reporting agency shall place a security freeze on a consumer's credit report no later than five business days after receiving a written request from the consumer.

(c) The credit reporting agency shall send a written confirmation of the security freeze to the consumer within ten business days of placing the security freeze and shall provide the consumer with a unique personal identification number or password, other than the consumer's social security number, to be used by the consumer when providing authorization for the release of the consumer's credit for a specific party, parties, or period of time.

(d) If the consumer wishes to allow access to the consumer's credit report for a specific party, parties, or period of time while a freeze is in place, the consumer shall contact the credit reporting agency, request that the freeze be temporarily lifted, and provide the following:

(1) Clear and proper identification;

(2) The unique personal identification number or password provided by the credit reporting agency; and

(3) Clear and proper information regarding the third party, parties, or time period for which the report shall be available to users of the credit report.

(e) A credit reporting agency may develop procedures involving the use of telephone, fax, the internet, or other electronic media to receive and process a request from a consumer to temporarily lift a freeze on a credit report in an expedited manner.

(f) A credit reporting agency that receives a request from a consumer to temporarily lift a freeze on a credit report shall comply with the request no later than three business days after receiving the request.

(g) A credit reporting agency shall remove or temporarily lift a freeze placed on a consumer's credit report only in the following cases:

(1) Upon consumer request; or

(2) When the consumer's credit report was frozen due to a material misrepresentation of fact by the consumer.

If a credit reporting agency intends to remove a freeze upon a consumer's credit report pursuant to this subsection, the credit reporting agency shall notify the consumer in writing prior to removing the freeze on the consumer's credit report.

(h) If a third party requests access to a credit report on which a security freeze is in effect and this request is in connection with an application for credit or any other use and the consumer does not allow the consumer's credit report to be accessed for that specific party or period of time, the third party may treat the application as incomplete.

(i) If a consumer requests a security freeze, the credit reporting agency shall disclose to the consumer the process of placing and temporarily lifting a security freeze and the process for allowing access to information from the consumer's credit report for a specific party, parties, or period of time while the security freeze is in place.

(j) A security freeze shall remain in place until the consumer requests that the security freeze be removed. A credit reporting agency shall remove a security freeze within three business days of receiving a request for removal from the consumer who provides both of the following:

(1) Clear and proper identification; and

(2) The unique personal identification number or password provided by the credit reporting agency pursuant to subsection (c).

(k) A credit reporting agency shall require clear and proper identification of the person making a request to place or remove a security freeze.

(l) The provisions of this section, including the security freeze, do not apply to the use of a consumer report by the following:

(1) A person, or the person's subsidiary, affiliate, agent, or assignee with which the consumer has or, prior to assignment, had an account, contract, or debtor-creditor relationship for the purposes of reviewing the account or collecting the financial obligation owing for the account, contract, or debt, or extending credit to a consumer with a prior or existing account, contract, or debtor-creditor relationship. For purposes of this paragraph, "reviewing the account" includes activities related to account maintenance, monitoring, credit line increases, and account upgrades and enhancements;

(2) A subsidiary, affiliate, agent, assignee, or prospective assignee of a person to whom access has been granted for purposes of facilitating the extension of credit or other permissible use;

(3) Any person acting pursuant to a court order, warrant, or subpoena;

(4) A child support enforcement agency when investigating a child support case pursuant to Title IV-D of the Social Security Act (42 U.S.C. sections 651-679) and section 4102 of Title 33;

(5) The department of the attorney general or county prosecuting attorneys or their agents or assignees acting to investigate Medicaid fraud;

(6) The department of taxation, county taxing authorities, or any of their agents or assignees, acting to investigate or collect delinquent taxes or assessments, including interest and penalties, unpaid court orders, or to fulfill any of their other statutory or charter responsibilities;

(7) The use of credit information for the purposes of prescreening as provided by the federal Fair Credit Reporting Act (15 U.S.C. sections 1681-1681u);

(8) Any person for the sole purpose of providing a credit file monitoring subscription service to which the consumer has subscribed; and

(9) A credit reporting agency for the sole purpose of providing a consumer with a copy of the consumer's credit report upon the consumer's request.

S -4 Credit reporting agency duties if security freeze in place. If a security freeze is in place, a credit reporting agency shall not change any of the following official information in a credit report without sending a written confirmation of the change to the consumer within thirty days of the change being posted to the consumer's file: name, date of birth, social security number, and address. Written confirmation is not required for technical modifications of a consumer's official information, including name and street abbreviations, complete spellings, or transposition of numbers or letters. In the case of an address change, the written confirmation shall be sent to both the new address and the former address.

-5 Persons not required to place security freeze. The requirement under this chapter to place a security freeze on a credit report does not apply to:

(1) A check services or fraud prevention services company, which reports on incidents of fraud or issues authorizations for the purpose of approving or processing negotiable instruments, electronic fund transfers, or similar methods of payment;

(2) A deposit account information service company, which issues reports regarding account closures due to fraud, substantial overdrafts, ATM 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; and

(3) A credit reporting agency that:

(A) Acts only to resell credit information by assembling and merging information contained in a database of one or more credit reporting agencies; and

(B) Does not maintain a permanent database of credit information from which new credit reports are produced.

-6 Violation, penalties. Any person who violates any provision of this chapter shall be deemed to have engaged in an unfair or deceptive act or practice in the conduct of trade or commerce within the meaning of section 480-2."

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST