The result could cripple

the integrity of such systems. creditors' ability to make creditworthiness decisions in this manner. Creditors would be placed in the position of having to constantly redesign their systems, at great cost and significant loss in predictability, because a statistically sound system does not have an unlimited number of highly predictive characteristics. Further, creditors would be placed in the position

of explaining and even justifying the information found in consumer reports, when that function properly belongs to the entity which prepared the report. Moreover, the obligation to grant access to such reports would be costly and burdensome because often consumer reports are furnished to creditors via computer terminal with no print-out capability.

The current law works well. If the purpose of these changes is to educate consumers about their rights, we believe that the government should bear the cost of that educational effort, not creditors.

6.

Procedure in case of Disputed Accuracy.

If the accuracy or completeness of any item of

information which has been disclosed to a consumer by a creditor (i.e., pursuant to section 7) or if the completeness of the creditor's file is disputed by the consumer, specific obligations are imposed upon the creditor to promptly delete or correct the information.

After any reinvestigation the creditor

would be required to promptly notify the consumer of the result of the reinvestigation or of its decision regarding deletion or inclusion of information, clearly and conspicuously disclose

to the consumer his or her rights to file a statement setting forth the nature of the dispute and to have the creditor

clearly note in any subsequent disclosure that the information is disputed by the consumer.

These rules are cumbersome and far too burdensome.

The current mechanism for correcting information through consumer reporting agencies has worked well since enactment of the Fair Credit Reporting Act in 1971 and should not be changed. The requirements proposed here would impose drastic procedural obligations upon creditors in granting access to their files and are not needed, particularly in view of creditors' voluntary efforts to correct customers' files whenever an inaccuracy is discovered.

7. Creditor Correction Obligations

6

Section 9 of this Title requires that all information reported by a creditor to another creditor or to a consumer reporting agency "shall be accurate." If a creditor learns that information reported to a creditor or a consumer reporting agency, a debt collector, or an independent authorization service (within specified time limits) was not accurate, the creditor is obligated to notify the recipient of the error.

NRMA strongly opposes the imposition of civil liability in the event an item of information is in error. This is not because retailers' records are not accurate. They are. It is because we are convinced that to impose civil liability upon creditors whenever their records are not correct or current would lead to endless litigation. Large creditors currently

maintain millions of items of information and, when an error is discovered, they correct it immediately and voluntarily. More importantly, the Fair Credit Billing Act currently gives consumers the right to have erroneous information which appears on a billing statement corrected, and the Fair Credit Reporting Act gives consumers the right to have consumer reporting agencies reinvestigate disputed information and to have it deleted from the agency's files if it is found to be inaccurate. We believe that these laws have worked well. To impose civil liability upon tens of thousands of creditors in the event of an inaccurate record of a consumer's credit history would truly be excessive and unsupportable.

10. Implementing and Enforcement Authority.

The Federal Reserve Board is authorized to implement certain specific requirements and promulgate model notices to carry out the purpose of the Fair Information Fractices Act, we are concerned that the Board's deletion of aut! it; .. limited to implementing only specified sections of the law. Any such authority should, we believe, be broad en -ht encompass any operative provision of the bill, so that ties and uncertainties can be addressed and corrected a. need arises.

In conclusion, NPMA opposes Title II in ita mi

If certain additional protections for consumers can de
strated to be warranted, such as affliding commumet.
to see and obtain a copy of their cheater pr.
consumer reporting agency, these prote “i

plished by amending the Fair Credit Reporting Act. There is no basis for enacting an elaborate mechanism for regulating creditors as though they are consumer reporting agencies.

This

is the basic thrust of Title II, and the rules proposed to accomplish this are far too cumbersome, excessive and costly in relation to any possible benefits that they may deliver to

consumers.

Senator TSONGAS. I appreciate your offer. I intend that that will take place. I think there have been, as I said, a number of times that there are legitimate concerns that responsibly we have to address. We would like to tie you into that process.

The only point I was trying to make earlier is, when you have a Citibank-type of approach, it is maddening. I just don't think that that approach should be rewarded by the legislative process. There is too much of that going on in this country, and I just don't want to be a part of it.

So I appreciate your coming. We will get back to you in the process and submit the revise to you. And if you could then comment on that, that will be included in the record as well.

Mr. AIRES. We'd be glad to.

[Information not available in time for publication.]

Senator TSONGAS. Thank you very much. There will be one more hearing, probably the middle of next month, on the Government access and the insurance provisions.

Thank you very much.

[Whereupon, at 12:50 p.m., the hearing was adjourned.] [Additional information follows in the appendix.]

To provide safeguards for consumers in the areas of credit, banking, and
insurance, and for other purposes.

IN THE SENATE OF THE UNITED STATES

OCTOBER 23 (legislative day, OCTOBER 15), 1979

Mr. PROXMIRE introduced the following bill, which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

1

A BILL

To provide safeguards for consumers in the areas of credit, banking, and insurance, and for other purposes.

Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3 That this Act may be cited as the "Fair Financial Informa

4 tion Practices Act of 1979".

5

6

7

8

TITLE I-TO AMEND THE FAIR CREDIT

REPORTING ACT

SHORT TITLE

SECTION 1. This Act may be cited as the "Privacy Pro

9 tection Amendments of 1979".

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