more credit classifications; (2) impose new onerous procedural requirements on creditors when doing so; and (3) impose broader liability on creditors should they fail in their efforts to

comply with these new requirements.

CBA and ABA further believe that just as the exemption

for large dollar insurance transactions is preserved in H.R. 3740, the exemption for large dollar credit transactions should not be eliminated. Such transactions involve greater risk exposure than smaller transactions and require more extensive underwriting standards. As a result, Congress should not restrict the ability of creditors and other users of credit reports to control such risk by considering relevant information, including information that might otherwise be considered "obsolete" under the FCRA.

CERTIFICATION OF PURPOSES FOR WHICH REPORTS ARE OBTAINED The FCRA currently prohibits a consumer reporting agency from furnishing a credit report to any person if it has reasonable grounds for believing that the report will be used for an impermissible purpose. In addition, the agreements between consumer reporting agencies and creditors contain "blanket certifications" by creditors that they will obtain credit reports only for permissible purposes. Under the FCRA, a consumer reporting agency must insure that permissible purposes in fact exist, monitor that the creditors receiving such reports have legitimate business purposes to receive them and require separate certification of permissible purposes if there are

reasonable grounds to believe that a particular creditor is violating its blanket certification. If the consumer reporting

agency violates these existing duties to consumers, the agency is liable under the existing provisions of the FCRA. Similarly, a person who obtains a credit report without a permissible purpose is already subject to liability under the existing FCRA. Nevertheless, H.R. 4213 and H.R. 4122 would impose new

and burdensome certification requirements on consumer reporting agencies and creditors that obtain information from consumer reporting agencies. H.R. 4213 would require consumer reporting agencies to maintain a detailed record of the certified purpose for which any credit report or other information on any consumer is requested. H.R. 4122 would require an agency to include in a consumer's file the date on which any inquiry was made involving the file, the identity of the person making the inquiry, and the nature of the inquiry.

Requiring a certification of purpose, or other

information such as that required under H.R. 4122, in connection with each request for a credit report may be operationally feasible for those entities or individuals that only

occasionally obtain credit reports from consumer reporting agencies. CBA and ABA believe, however, that these provisions as currently drafted would create serious operational problems for the vast majority of creditors that use credit report information on a frequent basis and that the benefits to

consumers from the proposed certification procedures would be minimal.

Most creditors obtain credit reports from consumer reporting agencies through a highly automated process involving direct terminal or computer links with consumer reporting agencies. Many of these creditors request a large volume of credit reports every day for a broad range of credit related permissible purposes. It simply is not feasible for such creditors to provide a detailed explanation of the nature of each request or a check list of information regarding each request. Even if it were operationally possible to employ individual certifications and capture specific information regarding every credit report request, such a requirement would significantly delay the consumer application and collection process and substantially increase the costs of obtaining necessary credit report information, costs that ultimately would be borne by consumers. Creditors would be required to develop code books to abbreviate each of the purposes for which credit reports are requested. Personnel would have to be trained to recognize and correctly input the proper purpose for each transaction. The operation of such a system would greatly increase the risk of mistakes and violations of the FCRA for creditors that have a permissible purpose for a credit report, but record the wrong reason or otherwise incorrectly identify the request.

As

Moreover, the certification provisions proposed under these bills would provide little or no benefit to consumers. discussed above, the FCRA already prohibits obtaining a credit report without a permissible purpose. To date, the FCRA has been found to appropriately address virtually every case where a credit report was obtained for a purpose not permitted under the FCRA. In addition, a creditor that intentionally accesses a consumer reporting agency's computer to obtain information from the consumer reporting agency's file on a consumer without appropriate authorization may be subject to criminal sanctions, including imprisonment, under existing federal law.

See

18 U.S.C. S 1030. Thus, to the extent that credit reports are obtained without authorization, the problem should be addressed by more vigorous enforcement of the existing federal statutory provisions. Amendments to the FCRA requiring elaborate certification procedures are unnecessary and will not reduce the risk that individuals will occasionally obtain credit reports for impermissible purposes.

In short, CBA and ABA believe that the relatively small incremental benefit received by consumers from the elaborate certification procedures required by these bills would not justify the significantly increased burden imposed on creditors and the resulting costs imposed on consumers. Moreover, the existence of an individual certification, rather than a general certification, will not preclude or even discourage violations of the FCRA, and any creditor that currently violates its

general certification and obtains a credit report for an

impermissible purpose is already subject to liability under the existing FCRA.

NOTICE OF REPORTING INFORMATION

TO CONSUMER REPORTING AGENCIES

H.R. 3740 would require creditors and charge card issuers, before extending credit under any open-end consumer credit plan, issuing any charge card, or engaging in any consumer credit transaction other than under an open-end consumer credit plan, to provide consumers with a notice specifying the circumstances under which information will be furnished to a consumer reporting agency and describing the type of information that will be furnished. H.R. 3740 also would require a creditor or charge card issuer that has furnished information on a consumer to a consumer reporting agency to provide written notice to the consumer in the next statement mailed to the consumer or no later than 45 days after the information was furnished to the consumer reporting agency.

H.R. 4213 may also require creditors that regularly furnish information to a consumer reporting agency to provide, prior to furnishing such information on a consumer, written notice to the consumer describing the type of information and circumstances under which the information may be furnished to the consumer reporting agency. The bill also would require that such notice include a statement that the consumer should notify the creditor of any incomplete or inaccurate information