Page 2 Last year, I was prepared to offer an amendment to H.R. 4123 when it came before the full House Banking Committee for consideration. My amendment would have barred employers from using credit files without a consumer's approval to do so. Unfortunately, Congress adjourned before the subcommittee completed action on H.R. 4123. I hope, Mr. Chairman, that you will include it--or a similar provision--in any FCRA legislation you consider. Thank you again for this opportunity to share my concerns about inadequacies in the Fair Credit Reporting Act. I look forward to working with you to enact legislation in the consumers' best interest during this Congress. KLECZK008 [Amdt. #1] [7-19-90] AMENDMENT TO H.R. 4213 OFFERED BY MR. KLECZKA Page 3, beginning on line 21, strike subsection ́ ́ and subsections ́ ́. insert Page 4, line 20, strike the closing quotation marks and the 2d period. Page 4, after line 20, insert the following new subsection: 1 (c) DISCLOSURES RELATING TO USE OF INFORMATION AND 2 REPORTS FOR EMPLOYMENT PURPOSES.--No consumer reporting 3 agency may furnish a consumer report or other information 4 relating to any consumer pursuant to subsection (a)(3)(B) to 5 6 any person referred to in such subsection for employment purposes unless the person certifies to the agency that the 7 consumer has received written notice from such person that a 8 consumer report or other information from the consumer's file 9 may be requested by such person for employment purposes 10 (including the consideration by such person of an employment 11 application from the consumer). ́ ́. KLECZK008 2 Page 20, line 3, strike Subsection (a) of ́ ́ and insert (a) DUTIES RELATING TO USERS WHO TAKE ACTIONS ADVERSE TO THE CONSUMER.--Subsection (a) of ́ ́. Page 20, after line 22, insert the following new subsection: 1 2 (b) USERS OF CONSUMER REPORTS FOR EMPLOYMENT PURPOSES.--Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is amended by adding at the end the following new subsection: (a) DUTY OF USERS OF CONSUMER REPORTS FOR EMPLOYMENT PURPOSES.--No person may use a consumer report for employment 3 purposes unless the person provides written notice to the 4 consumer before the report is obtained from any consumer 5 reporting agency that a consumer report relating to such 6 consumer may be requested and used by such person for employment purposes (including the consideration by such 7 8 person of an employment application from the consumer). ́ ́. STATEMENT BY CONGRESSMAN RICHARD LEHMAN BEFORE THE HOUSE BANKING SUBCOMMITTEE ON HEARING ON AMENDMENTS TO THE FAIR CREDIT REPORTING ACT MR. CHAIRMAN: June 6, 1991 I APPRECIATE THIS OPPORTUNITY TO TESTIFY REGARDING AN ISSUE THAT IS OF GREAT CONCERN TO ME THE PROTECTION OF CONSUMER PRIVACY IN THE CREDIT REPORTING INDUSTRY. AS YOU KNOW, IN THE LAST CONGRESS, IN MY CAPACITY AS CHAIRMAN OF THIS SUBCOMMITTEE, I HELD A HEARING IN SEPTEMBER, 1989 TO EXAMINE HOW EFFECTIVE THE FAIR CREDIT REPORTING ACT WAS IN PROTECTING CONSUMER PRIVACY. THIS WAS IN RESPONSE TO MANY INNOVATIONS WHICH HAVE OCCURRED IN THE INDUSTRY AND THE LACK OF SUBSTANTIAL REVIEW OF THE ACT SINCE ITS ENACTMENT. I RECOMMEND TO THE NEW MEMBERS OF THIS SUBCOMMITTEE THAT THEY REVIEW THE REPORT FROM THAT HEARING IN ORDER TO HAVE A THOROUGH UNDERSTANDING OF THIS ISSUE. I HAVE ALSO PROVIDED SOME NEWSPAPER AND MAGAZINE ARTICLES WITH MY TESTIMONY STORY AFTER STORY OF HOW THE FAIR CREDIT REPORTING ACT HAS FAILED TO PROVIDE THE NEEDED PROTECTION FOR CONSUMERS. MOST OFTEN, CONSUMERS COMPLAIN THAT THEIR REPORTS INCLUDE INACCURATE INFORMATION AND THAT THEY HAVE DIFFICULTY CORRECTING THEM. OTHERS HAVE BEEN TURNED DOWN FOR LOANS BECAUSE THE NUMBER OF INQUIRIES ABOUT THEIR CREDIT FROM COMPANIES TRYING TO MARKET "PRE-APPROVED" CREDIT CARDS LEAVE THE WRONG IMPRESSION - THAT THE CONSUMER IS ASKING FOR MONEY ALL OVER TOWN. STILL OTHERS WERE SHOCKED TO FIND OUT THAT THEIR NAME WAS ON A LIST EASILY OBTAINED BY A U.S. NEWS AND WORLD REPORT REPORTER FROM ONE OF THE CREDIT REPORTING AGENCIES. JUST TO GIVE YOU AN EXAMPLE OF THE SERIOUS IMPACT A LACK OF EFFECTIVENESS OF THE FAIR CREDIT ACT CAN HAVE, I WANT TO SHARE WITH YOU SOMETHING I HEARD FROM A CONSTITUENT OF MINE IN FRESNO, CALIFORNIA: "I WANT YOU TO KNOW THAT I AM VERY AWARE THAT CREDIT BUREAUS ARE GIVING OUT FINANCIAL INFORMATION ABOUT MY CREDIT ACROSS THIS STATE AND THAT THEY ARE GIVING OUT INCORRECT INFORMATION. I FIRST DISCOVERED THIS 3 YEARS AGO WHEN I TRIED TO REFINANCE OUR HOUSE TO TAKE ADVANTAGE OF THE LOWER INTEREST RATES. DUE TO THE MIX-UP OF OUR SON'S CREDIT BEING LISTED AS OURS, WE WERE TURNED DOWN FOR THE LOAN, WE LOST VALUABLE TIME IN STRAIGHTENING THIS OUT, AND LOST QUITE A BIT OF MONEY BECAUSE THE RATES ON THE LOAN WENT BACK UP IN THE MEANTIME. THE REACTION OF THE CREDIT BUREAUS AND THE BANK WAS "TOUGH LUCK." UNFORTUNATELY, CONSUMERS RARELY DISCOVER ERRORS IN THEIR REPORTS UNTIL SUCH CRITICAL MOMENTS. PART OF THIS PROBLEM STEMS FROM A LACK OF CONSUMER AWARENESS OF THEIR RIGHTS UNDER THE FAIR CREDIT REPORTING ACT. HISTORY OF THE FAIR CREDIT REPORTING ACT THE FAIR CREDIT REPORTING ACT OF 1970 (FCRA) HAS BEEN IN EFFECT NOW FOR NEARLY 20 YEARS. THERE HAVE BEEN LEGISLATIVE EFFORTS TO AMEND THE ACT OVER THE YEARS, BUT NO SIGNIFICANT CHANGES HAVE BEEN MADE. IN THE MEANTIME, THE INDUSTRY HAS CHANGED SUBSTANTIALLY. IN OCTOBER OF 1970, WE HAD LESS THAN $104 BILLION DOLLARS IN CONSUMER INSTALLMENT CREDIT OUTSTANDING. TODAY, OVER $700 BILLION IN CONSUMER CREDIT IS OUTSTANDING. ADDITION, CREDIT REPORTING AGENCIES HAVE EXPANDED THEIR ACTIVITIES TO PROVIDING INFORMATION LISTS TO DIRECT MAIL MARKETERS, SUCH AS SOLICITORS WHO ARE LOOKING TO MARKET THEIR CREDIT CARDS. IN CURRENTLY UNDER THE FAIR CREDIT REPORTING ACT, CONSUMERS HAVE THE RIGHT TO SEE THE "NATURE AND SUBSTANCE" OF THEIR CREDIT REPORT IF THEY REQUEST IT FOR A NOMINAL FEE. IF A CONSUMER IS DENIED CREDIT, THEY MAY OBTAIN THE REPORT FOR FREE. THE CREDIT REPORTING AGENCY IS OBLIGATED TO ASSURE "MAXIMUM POSSIBLE ACCURACY" BUT THE LAW DOES NOT GIVE ANY GUIDELINES. IF THE CONSUMER DISCOVERS AN INACCURACY, THE CREDIT BUREAU MUST THEN, WITHIN A REASONABLE TIME PERIOD, REINVESTIGATE THE MATTER UNLESS IT BELIEVES THE REQUEST TO BE FRIVOLOUS AND INACCURATE. IF CORRECTED, THE CONSUMER CAN REQUEST THAT THE BUREAU SEND THIS INFORMATION TO ANY PERSON WHO HAS INQUIRED ABOUT THEIR CREDIT WITHIN THE LAST 6 MONTHS. PRESCREENING SECTION 604 OF THE LAW SAYS THAT THERE ARE CERTAIN "PERMISSIBLE PURPOSES" FOR WHICH CREDIT REPORTING AGENCIES CAN RELEASE CONSUMER REPORTS, "AND NO OTHER." THE INDUSTRY SAYS THAT FURNISHING LISTS IS PERMISSIBLE UNDER SECTION 604 (3)(A), WHICH ALLOWS A REPORT TO BE RELEASED TO SOMEONE THE AGENCY HAS REASON TO BELIEVE INTENDS TO USE THE INFORMATION IN CONNECTION WITH A CREDIT TRANSACTION INVOLVING THE CONSUMER. THE FTC'S INTERPRETATION PERMITS PRE-SCREENING IF AN OFFER OF CREDIT IS EXTENDED TO EVERYONE ON THE LIST. STILL OTHERS SAY THAT THE INTENT OF THAT PERMISSIBLE PURPOSE WAS ONLY TO ALLOW RELEASE OF A REPORT WITHOUT THE CONSUMER'S PERMISSION WHEN THE CONSUMER KNOWINGLY APPLIES FOR CREDIT AS OPPOSED TO THIS SITUATION WHERE THE CONSUMER HAS NO IDEA HIS NAME (AND OTHER INFORMATION) IS BEING SUPPLIED TO A CREDITOR. CLEARLY, THE DIFFERING INTERPRETATIONS NEED TO BE CLARIFIED. H.R. 194, THE CONSUMER CREDIT PROTECTION AMENDMENTS ON JUNE 12, 1990, I HELD A FOLLOW-UP HEARING TO CONSIDER LEGISLATION WHICH HAD BEEN INTRODUCED AIMED AT ADDRESSING MANY OF THE PROBLEMS RAISED AT THE SEPTEMBER HEARING. THE LEGISLATION I SPONSORED, H.R. 4213, THE CONSUMER CREDIT PROTECTION AMENDMENTS OF 1990, WAS A BALANCED AND COMPREHENSIVE APPROACH TO MAKING THE LAW MORE EFFECTIVE. I HAVE SINCE REINTRODUCED THIS MEASURE. H.R. 194 REMAINS UNCHANGED FROM THE PREVIOUS CONGRESS. WHILE MY |