AN ACT Relating to consumer credit reporting; adding a new chapter to Title 19 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. (1) The legislature finds:

(a) The consumer credit system is dependent upon fair and accurate credit reporting. Inaccurate credit reports impair the efficiency of the consumer credit system; unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the consumer credit system.

(b) Consumer reporting agencies have a vital role in investigating the credit worthiness, credit standing, credit capacity, character and general reputation of consumers.

(c) The ability of consumers to obtain credit, employment, and insurance frequently depends on the information disseminated by consumer reporting agencies.

(d) There is a need to assure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy.

(2) It is the purpose of this chapter to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, employment, and insurance information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this chapter.

NEW SECTION. Sec. 2. The definitions and rules of construction set forth in this section are applicable for the purpose of this chapter.

(1) "Person" means any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.

(2) "Consumer" means an individual.

(3)(a) "Consumer report" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (i) credit or insurance to be used primarily for personal, family, or household purposes, (ii) employment purposes, or (iii) such other purposes as the consumer may authorize in accordance with the provisions of this chapter.

(b) The term does not include (i) any report containing information solely as to transactions or experiences between the consumer and the person making the report, (ii) any authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device, or (iii) any report in which a person who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer conveys a decision with respect to such request, if the third party advises the consumer of the name and address of the person to whom the request was made and such person makes the disclosures to the consumer required under section 13 of this act.

(4) "Investigative consumer report" means a consumer report or portion thereof in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through interviews with neighbors, friends, or associates of the consumer reported on or with others with whom the person is acquainted or who may have knowledge concerning any such information. However, such information shall not include specific factual information on a consumer's credit record obtained directly from a creditor of the consumer or from a consumer reporting agency when such information was obtained directly from a creditor of the consumer or from the consumer.

(5) "Consumer reporting agency" means any person which, for compensation or on a cooperative nonprofit basis, or otherwise, engages in whole or in part in the practice of assembling or evaluating consumer information or other information on consumers for the purpose of furnishing consumer reports to third parties. As used in this subsection, furnishing consumer reports to third parties includes the furnishing of such reports to an agency of government.

(6) "File," when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency, regardless of how the information is stored.

(7) "Employment purposes," when used in connection with a consumer report, means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment, or retention as an employee.

(8) "Department" means the department of licensing.

NEW SECTION. Sec. 3. A consumer reporting agency may furnish a consumer report under the following circumstances and no others:

(1) In response to the order of a court having jurisdiction to issue such an order. Immediately upon receipt of the court order, the consumer reporting agency shall notify the consumer in writing of such court order, except when expressly prohibited from doing so by order of the court.

(2) In accordance with the provisions of sections 8 and 17 of this act.

(3) In the case of an investigative consumer report, in accordance with a specific, dated, affirmative written authorization of the consumer to whom it relates. At the time of a request for such authorization, the consumer reporting agency or the user acting on behalf of the agency shall disclose to the consumer in writing (a) the name, address, and telephone number of the person to whom the report is to be furnished, (b) that the consumer will receive without charge a copy of that report and is entitled to dispute the accuracy of any item of information contained therein pursuant to section 12 of this act, and (c) the name, address, and telephone number of the agency, except that if the request is by or on behalf of a user and the name of the agency is not yet known, the user may satisfy this requirement by advising the consumer in writing of the name, address, and telephone number of the agency promptly after that information becomes available.

(4) In accordance with the written instructions of the consumer to whom it relates.

(5) To a person which it has reason to believe:

(a) Intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer;

(b) Intends to use the information for employment purposes;

(d) Intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider an applicant's financial responsibility or status;

(e) Otherwise has a legitimate business need for the information in connection with a business transaction involving the consumer.

NEW SECTION. Sec. 4. (1) Except as authorized under section 4(2) of this act, no consumer reporting agency may make any consumer report containing any of the following items of information:

(a) Bankruptcies which, from date of adjudication of the most recent bankruptcy, antedate the report by more than fourteen years.

(b) Suits and judgments which, from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

(d) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

(e) Records of arrest, indictment, or conviction of crime which, from date of disposition, release, or parole, antedate the report by more than seven years.

(f) Any other adverse item of information which antedates the report by more than seven years.

(2) Section 4(1) of this act is not applicable in the case of any consumer credit report to be used in connection with:

(a) A credit transaction which may reasonably be expected to involve a principal amount of fifty thousand dollars or more;

(b) The underwriting of life insurance which may reasonably be expected to involve a face amount of fifty thousand dollars or more; or

(c) The employment of any individual at an initial annual compensation which may reasonably be expected to equal twenty thousand dollars or more.

(3) No consumer reporting agency may make any consumer report which contains information relating to an arrest, complaint, indictment, information, or other criminal charge unless the report discloses the disposition of the charge and, in the case of an arrest, whether a charge was made.

NEW SECTION. Sec. 5. A consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers that are matters of public record and are likely to have an adverse effect upon a consumer's ability to obtain employment shall:

(1) At the time such public record information is reported to the user of such consumer report, notify the consumer of the specific items of public record information that are being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported; and

(2) Maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer's ability to obtain employment is reported it is complete and up to date. For purposes of this subsection, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item, at the time of the report, is reported.

NEW SECTION. Sec. 6. (1) No person may procure or cause to be prepared an investigative consumer report on any consumer unless that consumer has given a specific, dated, affirmative written authorization of such an investigative consumer report after receiving clear and conspicuous written disclosure to the consumer of the methods and scope of the investigation. The disclosure shall include:

(a) A blank copy of any standard questionnaire and other similar forms to be used in the investigation;

(b) A list of the questions expected to be asked in the investigation;

(d) The name, address, and telephone number of each person to whom a copy of such report may be furnished.

(2) The requirements of section 6 (1) of this act do not apply when an investigative consumer report is prepared at the request of an employer of the consumer in connection with an investigation of alleged misconduct by the consumer in the course of employment.

(3) No consumer reporting agency may disseminate an investigative consumer report on a consumer except (a) in accordance with the requirements of section 3(3) of this act, and (b) unless at the same time it furnishes a copy of the report to the consumer without charge.

(4) Any person from whom information is sought in the course of preparing an investigative consumer report shall be advised of the name and address of the person preparing the report and that any information furnished and its source may be included in a consumer report which will be available to the consumer on request.

(5) Whenever a consumer reporting agency prepares an investigative consumer report, no adverse information in the report other than information which is a matter of public record may be included in a subsequent investigative consumer report unless the adverse information has been verified in the process of making the subsequent report, or the adverse information was received within the three-month period preceding the date the subsequent report is furnished.

(6) Each investigative consumer report shall be in writing, shall identify the sources of all information contained therein, and shall be retained in the file of the consumer to whom it relates for a period not less than one year following its completion.

NEW SECTION. Sec. 7. (1) Whenever a consumer reporting agency prepares a consumer report, it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

(2) Every consumer reporting agency shall maintain reasonable procedures designed to limit the furnishing of consumer reports in accordance with section 3 of this act and to avoid violations of section 4 of this act. These procedures shall require that prior to being furnished with a consumer report, a prospective user shall identify himself or herself and provide reasonable assurance that the requirements of section 3 of this act have been satisfied. Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report to any person if it has reasonable grounds for believing that the disclosure will not be in compliance with section 3 of this act.

(3) Each notice, authorization, and disclosure given to or requested from consumers pursuant to this chapter shall be in writing which is large, conspicuous, and simple enough so that a consumer can readily discern its meaning.

NEW SECTION. Sec. 8. Notwithstanding the provisions of section 3 of this act, a consumer reporting agency may furnish identifying information respecting any consumer, limited to the consumer's name, address, former addresses, places of employment, or former places of employment, to a governmental agency.

NEW SECTION. Sec. 9. (1) Every consumer reporting agency shall, upon request and proper identification of any consumer, promptly disclose to the consumer:

(a) All information in its files on the consumer at the time of the request;

(b) The sources of the information; and

(i) For employment purposes within the two-year period preceding the request; and

(ii) For any other purpose within the six-month period preceding the request.

(2) Section 9(1) of this act does not require the disclosure to the consumer of (a) the sources of information contained in any investigative consumer report prepared prior to the effective date of this act or (b) other information described in section 9(1) of this act if such information is not contained in the files of the consumer reporting agency on that date.

NEW SECTION. Sec. 10. (1) A consumer reporting agency shall make the disclosures required under section 9 of this act during normal business hours and on reasonable notice. The consumer reporting agency shall fulfill consumer requests at least as expeditiously as it fulfills requests initiated by or through users.

(2) The disclosures required under section 9 of this act shall be made to the consumer in any of the following ways, in accordance with the consumer's request:

(a) In person if the consumer appears in person and furnishes proper identification. In any such case, the consumer shall be permitted a personal, visual inspection of the file, and at the consumer's request, the reporting agency shall provide a copy of such file;

(b) By telephone if the consumer has made a written request, with proper identification, for telephone disclosure, and the toll charge, if any, for the telephone call is prepaid by or charged directly to the consumer; and

(3) Each consumer reporting agency shall provide trained personnel to explain to the consumer any information furnished to the consumer pursuant to section 9 of this act. Information furnished shall be accompanied by an explanation if provided in code or trade terminology.

(4) The consumer shall be permitted to be accompanied by one other person of his or her choosing, who shall furnish reasonable identification. A consumer reporting agency may require the consumer to furnish a written statement granting permission to the consumer reporting agency to discuss the consumer's file in such person's presence.

NEW SECTION. Sec. 11. All disclosures required under this chapter shall be made without charge to the consumer, except (1) as provided under section 10(2)(b) of this act, or (2) when a consumer against whom adverse action has not been taken requests a copy of his or her consumer report, in which case a consumer reporting agency may impose a charge not to exceed actual copying costs for furnishing a consumer report pursuant to section 9 of this act.

NEW SECTION. Sec. 12. (1)(a) A consumer reporting agency shall inform any consumer examining his or her credit file that he or she is entitled to dispute the completeness or accuracy of any information contained in the file, shall furnish to each such consumer a notice of dispute form upon which to designate any errors which the consumer discovers in such file, and shall assist the consumer in preparing a notice of dispute when requested.

(b) If the completeness or accuracy of any item of information contained in the file is disputed by a consumer, and a notice of dispute is given to the consumer reporting agency by the consumer, the consumer reporting agency, unless it promptly deletes or corrects the disputed information and notifies the consumer of the action, shall within a reasonable period of time, but in no case longer than thirty days, reinvestigate and record the current status of that information unless it has reasonable grounds to believe that the dispute by the consumer is frivolous or irrelevant. If, after the reinvestigation, the information is reasonably found to be inaccurate or can no longer be verified, the consumer reporting agency shall promptly delete or correct the information and notify the consumer of the action. The presence of information in the consumer's file which is inconsistent with a notice of dispute does not in and of itself constitute reasonable grounds for believing the dispute is frivolous or irrelevant.

(2) If the reinvestigation does not resolve the dispute to the consumer's satisfaction or if the agency finds the dispute to be frivolous or irrelevant, the agency shall promptly notify the consumer. In such event, (a) the consumer may file a brief statement of dispute setting forth the consumer's position regarding the dispute; the consumer reporting agency may limit any such statement to not more than one hundred words if it provides the consumer with assistance in writing the statement, and (b) the agency shall disclose to the consumer in writing that he or she has the right to file an administrative complaint under section 17 of this act and to bring an action for damages and injunctive relief under section 14 of this act.

(3) Whenever a statement of dispute is filed, the consumer reporting agency shall, in any subsequent consumer report containing the information in question, clearly note that it is disputed by the consumer and provide either the consumer's statement of dispute or a clear and accurate summary thereof.

(4) Following any deletion or correction of information which is found to be inaccurate or whose accuracy can no longer be verified or any notation as to disputed information, the consumer reporting agency shall, at the request of the consumer, furnish notification that the item has been deleted or corrected or the consumer's statement of dispute or summary thereof to any person specifically designated by the consumer who has within two years prior thereto received a consumer report for employment purposes, or within six months prior thereto received a consumer report for any other purpose, which contained the deleted, corrected, or disputed information. At or prior to the time the information is deleted or corrected, or the consumer's statement of dispute is received, the consumer reporting agency shall clearly and conspicuously disclose to the consumer his or her rights to make such a request.

NEW SECTION. Sec. 13. (1) Whenever any adverse action is taken either wholly or in part because of information contained in a consumer report from a consumer reporting agency, the user of the consumer report shall:

(a) Disclose in writing to the consumer against whom the adverse action has been taken:

(i) The reason for taking the adverse action, including reference to the particular item or items of information contained in the consumer report upon which the adverse action has been wholly or partly based;

(ii) The name, address, and telephone number of the consumer reporting agency making the report; and

(iii) The fact that the consumer is entitled (A) to inspect and be advised of the contents of the file in person, by telephone, and by mail and to receive a copy of the file from the consumer reporting agency, all without charge, except telephone toll charges; (B) to dispute the completeness or accuracy of any information in the file in accordance with section 12 of this act; and (C) to file an administrative complaint under section 17 of this act and to bring an action for damages and injunctive relief under section 14 of this act; and

(b) Unless the action was based on an investigative consumer report, a copy of which has already been furnished to the consumer pursuant to section 6 of this act, furnish to the consumer without charge a copy of the consumer report, if written, or a written summary if the consumer report was oral.

(2) Whenever credit or insurance for personal, family, or household purposes involving a consumer is denied or the charge for the credit or insurance is increased either wholly or in part because of information obtained from a person other than a consumer reporting agency bearing upon the consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of the information shall disclose in writing to the consumer at the time the action is taken the reason for the adverse action, and the nature of the information.

(3) Whenever adverse action is taken with respect to the employment, promotion, reassignment, or retention of a consumer, either wholly or in part because of information bearing upon the consumer's credit worthiness, credit standing, or credit capacity obtained from a commercial firm or employer other than a consumer reporting agency, the user of the information shall disclose in writing to the consumer at the time the action is taken the reason for the adverse action and the nature of the credit information.

(4) No person may be held liable for any violation of this section if the person shows by a preponderance of the evidence that at the time of the alleged violation he or she maintained reasonable procedures to assure compliance with this section.

NEW SECTION. Sec. 14. (1) Any consumer reporting agency or user of information that wilfully fails to comply with any requirement imposed under this chapter with respect to any consumer is liable to that consumer in an amount equal to the sum of:

(a) Any actual damages sustained by the consumer as a result of the failure;

(b) Punitive damages in the amount of one thousand dollars or such greater amount as the court may allow; and

(c) In the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorneys' fees as determined by the court.

(2) Any consumer reporting agency or user of information which negligently fails to comply with any requirement imposed under this chapter with respect to any consumer is liable to that consumer in an amount equal to the sum of:

(a) Any actual damages sustained by the consumer as a result of the failure;

(b) Such amount of special damages as the court may allow, but not less than one hundred dollars for each violation of this chapter; and

(c) In the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorneys' fees as determined by the court.

(3) When materially inaccurate information about a consumer has been reported by a consumer reporting agency, the agency shall be liable under this section unless it shows by a preponderance of evidence that the violation resulted from a bona fide error notwithstanding the maintenance of reasonable procedures to assure compliance and avoidance of error.

(4) The court may provide such equitable relief as it deems necessary or proper, including enjoining the defendant from further violations of this chapter.

NEW SECTION. Sec. 15. An action to enforce any liability created under this chapter may be brought in any court of competent jurisdiction, without exhausting administrative remedies under this chapter, within two years from the date on which the individual who is bringing the action knew or should have known of the cause of action. Whenever any action is brought by the department, the attorney general, or the prosecuting attorney for violation of this chapter, the running of the foregoing statute of limitations, with respect to every private right of action for damages which is based in whole or in part on any matter complained of in the action by the department, the attorney general, or the prosecuting attorney, shall be suspended during the pendency thereof, and for one year thereafter.

NEW SECTION. Sec. 16. (1) Any person who wilfully obtains information about a consumer from a consumer reporting agency by means of a misstatement of or failure to disclose a fact which is material to compliance with the requirements of this chapter shall be fined not more than five thousand dollars or imprisoned not more than one year, or both.

(2) Any officer or employee of a consumer reporting agency who wilfully discloses information about a consumer in violation of this chapter shall be fined not more than five thousand dollars or imprisoned not more than one year, or both.

(3) Any officer or employee of a consumer reporting agency who wilfully falsifies a consumer report or any records relating thereto is guilty of a misdemeanor.

NEW SECTION. Sec. 17. (1) Compliance with the requirements imposed under this chapter may be enforced by the department of licensing.

(2) When it appears to the department that a person has engaged in, is engaging in, or is about to engage in any practice declared to be unlawful by this chapter; when the department receives a written complaint from a consumer of a practice declared to be unlawful under this chapter; or when the department believes it to be in the public interest that an investigation should be made to ascertain whether a person in fact has engaged in, is engaging in, or is about to engage in any practice declared to be unlawful by this chapter, the department may:

(a) Examine under oath any person in connection with the conduct of any preparation, maintenance, or use of a consumer report;

(b) Examine any file, consumer report, record, book, document, account, or paper as the department considers necessary;

(c) Pursuant to an order of a superior court, impound any item referred to in section 17(2)(b) of this act, produced in accordance with this chapter, and retain it in the department's possession until the completion of all proceedings in connection with which it is produced.

(3) The department may adopt rules to carry out the purposes of this chapter. Any reference to any requirement imposed under this chapter or any provision thereof includes reference to the rules of the department under this chapter or the provision thereof in question.

(4) To accomplish the objectives and to carry out the duties prescribed by this chapter, the department, in addition to other powers conferred upon it by this chapter, may issue subpoenas to any person and conduct hearings in aid of any investigation or inquiry as may be necessary.

(5) Service by the department of any notice requiring a person to file a statement or report, or of a subpoena upon any person, shall be made:

(a) Personally by delivery of a duly executed copy thereof to the person to be served, or if a person is not a natural person, in the manner provided by law as if a civil complaint had been filed; or

(b) By mailing by certified mail a duly executed copy thereof to the person to be served at his or her last known abode or principal place of business within this state.

(6) If a person fails or refuses to file any statement or report, or obey any subpoena issued by the department, the department may apply to the superior court and, after hearing thereon, request an order:

(a) Granting injunctive relief, restraining the dissemination or use of any credit report by such persons, or the conduct of any trade or commerce that is involved;

(b) Vacating, annulling, or suspending the corporate charter of a corporation created by or under the laws of this state or revoking or suspending the certificate of authority to do business in this state of a foreign corporation or revoking or suspending any other licenses, permits, or certificates issued pursuant to law to such person which are used to further the allegedly unlawful practice; and

(7) In the administration of this chapter, the department may accept an assurance of voluntary compliance with respect to any method, act, or practice deemed to be violative of this chapter from any person who has engaged in, is engaging in, or was about to engage in such method, act, or practice. Evidence of a violation of an assurance of voluntary compliance shall be prima facie evidence of a violation of this chapter in any subsequent proceeding brought by the department against the alleged violator.

(8) Whenever the department has reason to believe that any person is using, has used, or is about to use any method, act, or practice declared by this chapter to be unlawful and that proceedings would be in the public interest, the department may bring an action in the name of the state against the person to restrain by temporary or permanent injunction the use of the method, act, or practice. The court, in its discretion, may exercise all equitable powers necessary, including but not limited to: Injunction; revocation, forfeiture, or suspension of any license, charter, franchise, certificate, or other evidence of authority of any person to do business in this state; appointment of a receiver; dissolution of domestic corporations or associations; suspension or termination of the right of foreign corporations or associations to do business in this state; and restitution.

In addition to the remedies provided in this section, the department may request and the court may impose a civil penalty not to exceed fifty thousand dollars against any person found by the court to have engaged in any method, act, or practice declared unlawful under this chapter.

NEW SECTION. Sec. 18. This chapter may be cited as the fair consumer credit reporting act.

NEW SECTION. Sec. 19. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 20. Sections 1 through 18 of this act shall constitute a new chapter in Title 19 RCW.