contained in any periodic statement or other document provided to the consumer by the creditor.

Creditors frequently include a brief statement in the credit agreements governing loans and accounts that the creditor may report credit information about the accounts to consumer reporting agencies from time to time. Such statements are provided in light of the privacy laws of many states and help to respond to questions that occasionally arise regarding the reporting of customer information. Moreover, most consumers expect creditors to furnish information concerning their credit accounts, both positive and adverse, to consumer reporting agencies. Accordingly, CBA and ABA believe that separate notices informing consumers that these commonly known and accepted practices are occurring is unnecessary. Further, CBA and ABA are adamantly opposed to any provision that would require a creditor to provide disclosures to consumers each time information is provided to a consumer reporting agency. Such a requirement would be unduly burdensome and of little benefit to

consumers.

In addition to the costs of the notices themselves, the likely effect of sending a notice to a consumer every time such information is reported to a consumer reporting agency would be to inundate consumers with unnecessary and unwanted notices and create a flood of unwarranted inquiries to creditors and consumer reporting agencies regarding consumer credit files. The proposal is not practical because of the sheer volume of

notices that would be required. Tens of millions of items of credit experience are reported to consumer reporting agencies each month. The cost of sending corresponding disclosures, or even providing such notices with monthly statements, for even a fraction of these items of information would be staggering.

ADVERSE ACTION REQUIREMENTS

H.R. 4213, H.R. 4122 and H.R. 3740 all would amend the FCRA adverse action provisions to require creditors that use credit reports to provide additional information to consumers. Currently, the FCRA requires a creditor that denies credit on the basis of information contained in a credit report to provide the consumer with the name and address of the consumer reporting agency supplying the report. H.R. 4122 would require such creditors to provide written notice of the telephone number of the consumer reporting agency that supplied the credit report. H.R. 4213 and H.R. 3740 also would require such creditors to provide the applicant with written notice of the names and addresses of the three largest consumer reporting agencies and a summary of the consumer's rights and remedies under the FCRA. H.R. 4122 and H.R. 3740 would require creditors also to provide a copy of the consumer's credit report which was the basis of the adverse action.

CBA and ABA believe that none of these proposed changes warrant adoption and, in particular, are opposed to the proposal that consumers be provided with a copy of their credit report with their adverse action notice. The Equal Credit Opportunity

Act already provides that a consumer who has been denied credit must be furnished with a statement of the principal reasons for the credit denial. In addition, the FCRA already provides applicants with adequate information regarding the role of a credit report in the adverse action and the opportunity to obtain further information.

Currently, the FCRA adverse action

provisions require a creditor to disclose to the consumer the name and address of the consumer reporting agency that provided the report, so that rejected applicants may easily contact the agency with any questions about their reports. In addition, the FCRA already requires the consumer reporting agency to provide to the consumer upon request information contained in the consumer's credit file, and to explain that information to the

consumer.

As a result, a consumer who has been denied credit based on information contained in a credit report currently receives a statement of the principal reasons for the credit denial and has the right, if he or she chooses to exercise it, to examine fully the information that provided the basis for the credit report and denial of credit. Providing information regarding other consumer reporting agencies, or notices beyond those already required under the FCRA and the Equal Credit Opportunity Act, can only serve to confuse the consumer and detract from the important information currently provided. In addition, such disclosures are likely to increase the number of unwarranted consumer inquiries to these three agencies, thereby

interfering with their ability to provide and correct

information in their files and substantially increasing costs ultimately born by consumers.

Moreover, providing a copy of a credit report along with each adverse action notice may substantially undercut the usefulness of the information currently required under the Equal Credit Opportunity Act. The Equal Credit Opportunity Act adverse action notice requirements are based on the premise that a consumer who has been denied credit should be provided with a statement of only the principal reasons for that action. By focusing the applicant's attention on these key reasons, the applicant is more likely to identify inaccuracies in the information relied on by the creditor and improve the aspects of their credit record that caused the credit denial. Requiring extraneous information in the adverse action notice unrelated to the creditor's decision is likely to confuse the consumer and, thus, frustrate the purposes of the Equal Credit Opportunity

Act.

Requiring a creditor to provide an actual copy of a credit report for each denial of credit also would raise consumer privacy concerns not currently raised in connection with many credit transactions.

Presently, many creditors do not

even request a hard copy of a credit report on a consumer who applies for credit. Instead, the consumer's application is analyzed and evaluated electronically through the use of computer-to-computer links with consumer reporting agencies.

Consequently, no actual credit report is produced for, provided to, or reviewed by, the creditor. It would be contrary to the privacy interests of the consumer to require that such a report be prepared and distributed.

Similarly, a provision requiring creditors to provide consumers with actual copies of credit reports in connection with adverse action notices would be particularly inefficient and difficult to implement. The credit operations of many creditors are highly automated. Credit applications are evaluated by computer and the required adverse action notices are generated automatically. Such automated credit application processing systems would be severely burdened if adverse action notices must be matched and sent with copies of corresponding credit reports.

Regardless of the type of information furnished to a consumer with respect to his or her credit file, it is essential that the information received and reviewed by the consumer be provided by a consumer reporting agency so that the information is furnished by the entity that compiled and can explain that information.

IMPACT ON STATE LAWS

CBA and ABA urge the Subcommittee to keep in mind the many inconsistencies the proposed amendments to the FCRA would create with respect to state fair credit reporting act statutes and the impact such inconsistencies would have on the multistate operations of consumer reporting agencies and creditors