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WASHINGTON-Shortly after the House passed the Fair Accurate Credit Transaction Act, Senate Banking Committee Chairman Richard Shelby (R-Ala.) revealed his plans for legislation concerning identity theft and has indicated his leanings for reauthorization of preemption in the Fair Credit Reporting Act. The Senate Banking Committee had a mark up scheduled for Sept. 18 as of deadline, but with Hurricane Isabel threatening to barrel through the Mid-Atlantic region, that could get postponed. As of deadline, a bill had not been introduced but is not necessary for the mark up to proceed. Shelby’s “discussion draft” is tied to the reauthorization of FCRA provisions that preempt states from writing credit information sharing restrictions. The draft does not actually address the FCRA reauthorization, but CUNA Senior Vice President of Government Affairs John McKechnie said, Shelby has reportedly indicated he would be willing to permanently extend the provisions if some consumer protection oriented concessions are made. What the draft does include is new opt-out provisions regarding information sharing for marketing purposes. According to the draft, consumers should be informed of how their information is being shared among affiliates in marketing and permit them to “prohibit or limit” the information sharing for marketing purposes. This is an ability that credit unions and other financial institutions lobbied hard to keep during the privacy debate of Title V of the Gramm-Leach-Bliley Act. Additionally, the federal financial institutions regulators, including NCUA, and the Federal Trade Commission would need to perform a study on information sharing practices and their impact on consumers’ rights under FCRA. If this language is too restrictive on credit unions, so that they could not run efficiently and effectively, McKechnie said, CUNA would not be able to support it. “We continue to believe that not all information sharing is bad for credit union members and consumers in general,” he added. Another difference between the Senate draft and the version the House passed includes requiring creditors to notify consumers when their credit score resulted in them receiving a higher interest rate. The House bill requires a notice be sent to the consumer when they are turned down for credit because of their credit score. Shelby’s version would extend the current statute of limitations from two years from the time of the fraudulent act to two years from the discovery of the fraudulent act with a maximum of seven years and increase the maximum penalty for identity thieves from three to five years. The draft also contains a financial literacy program similar to one recently proposed by Senate Banking Committee Ranking Member Paul Sarbanes (D-Md.). The House passed H.R. 2622, otherwise known as the FACT Act, on Sept. 10. NAFCU Director of Legislative and Political Affairs Brad Thaler commented, “We were pleased to see the House pass it Wednesday evening by a vote of 392-30. The House bill is a well balanced measure both in making permanent the FCRA preemptions and making additional consumer protections.” Treasury Secretary John Snow congratulated the House on its decisive action. “On June 30, I outlined an Administration proposal with far-reaching consequences for all Americans. It would broaden the availability of credit, give consumers greater access to their credit records, and equip consumers and law enforcers with important new tools in the fight against identity theft,” Snow said. “Last night, by an overwhelming bipartisan vote, the House of Representatives approved legislation to implement our proposal.” The FACT Act reauthorizes certain federal preemptions of state laws that are tougher than the federal law dealing with consumer credit information sharing, contained in the Fair Credit Reporting Act, which are set to expire at the end of this year. Industry claims that having a patchwork of 50 different definitions and laws would make it very difficult and expensive to extend credit and would slow down the credit granting process. CUNA President and CEO Dan Mica penned a letter last week, noting this exact point. “[H.R. 2622] recognized that making these national standards permanent is a critical element in assuring that our nation’s consumers have easy access to credit and they receive fair and appropriate protections of their personal and financial information,” he wrote. [email protected]

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