Z-1433

AN ACT Relating to consumer credit reporting agencies; 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. The legislature finds and declares that consumers have a vital interest in establishing and maintaining creditworthiness, based upon correct data, because consumer reports are used as a basis for obtaining credit cards, loans, mortgages, and small business financing, as well as for some employment decisions and the rental or leasing of dwellings.

In addition, financial institutions depend upon fair and accurate credit reporting. Unfair, inaccurate reports undermine public confidence in the reliability of the financial service system.

Therefore, the provisions of this chapter are necessary to assure accurate credit data collection, maintenance, and reporting on the citizens of the state, and respect for the consumer's right to privacy. It is the policy of the state that consumer reporting agencies maintain accurate credit reports, resolve disputed reports promptly and fairly, and protect consumers from inappropriate access to their credit histories.

NEW SECTION. Sec. 2. This chapter shall be known as the fair credit reporting act.

NEW SECTION. Sec. 3. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1)(a) "Adverse action" includes:

(i) Any denial of insurance for personal, family, or household purposes;

(ii) The denial of employment or any other decision for employment purposes that adversely affects any current or prospective employee;

(iii) Any increase in any charge for, or any reduction in the amount of, insurance for personal, family, or household purposes; and

(iv) Any action or determination that:

(A) Is taken or made in connection with an application that was made by, or any transaction that was initiated by, any consumer; and

(B) Is adverse to the interest of the consumer.

(b) "Adverse action" does not include a refusal to extend additional credit under an existing credit arrangement if:

(i) The applicant is delinquent or otherwise in default with respect to the arrangement; or

(ii) The additional credit would exceed a previously established credit limit.

(2) "Consumer" means an individual.

(3)(a) "Consumer report" means a written, oral, or other communication of information by a consumer reporting agency bearing on a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that 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) Other purposes authorized under section 4 of this act.

(b) "Consumer report" does not include:

(i) A report containing information solely as to transactions or experiences between the consumer and the person making the report;

(ii) An authorization or approval of a specific extension of credit directly or indirectly by the issuer of a credit card or similar device; or

(iii) A report generated by a check approval and guarantee company to its subscribers as the basis for check acceptance by sellers of goods and services.

(4) "Consumer reporting agency" means a person who, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and who uses any means or facility of commerce for the purpose of preparing or furnishing consumer reports. "Consumer reporting agency" does not include check approval and guarantee companies.

(5) "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.

(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) "Investigative consumer report" means a consumer report or portion of it in which information on a consumer's character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom the consumer is acquainted or who may have knowledge concerning any items of information. However, the information does 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 the information was obtained directly from a creditor of the consumer or from the consumer.

(8) "Medical information" means information or records obtained, with the consent of the individual to whom it relates, from a licensed physician or medical practitioner, hospital, clinic, or other medical or medically related facility.

(9) "Person" includes an individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal or commercial entity.

(10) "User" when used in connection with the use of a consumer report means any recipient of a consumer report or an investigative consumer report other than the subject of the report.

NEW SECTION. Sec. 4. (1) A consumer reporting agency may furnish a consumer report under the following circumstances only:

(a) In response to the order of a court having jurisdiction to issue the order;

(b) In accordance with the written instructions of the consumer to whom it relates; or

(i) 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;

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

(iii) Intends to use the information in connection with the underwriting of insurance involving the consumer;

(iv) 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; or

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

(2)(a) Subject to (b) of this subsection, a consumer reporting agency may furnish a consumer report, and a person may use a consumer report, for employment purposes under the following circumstances only:

(i) The employment requires or is expected to require a security clearance issued by a state or local law enforcement agency or an agency of the United States as a condition for employment;

(ii) The employment requires or is expected to require an employee to be covered by a fidelity bond;

(iii) The employment requires or is expected to require an employee, on a regular basis and as part of the normal duties of employment:

(A) To handle or otherwise have access to substantial amounts of cash, trade secrets, or other things of substantial financial value of the employer; or

(B) To engage in any conduct or activity with respect to which the employee has a fiduciary duty.

(b) A consumer reporting agency may only furnish a consumer report for employment purposes if the person who obtains such report directly or indirectly from the agency certifies to the agency that:

(i) The disclosure required under (c) or (d) of this subsection, as the case may be, with respect to the consumer report has been made; and

(ii) Information from the consumer report will not be used in violation of any applicable federal or state equal employment opportunity law or regulation.

(c) A person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer who is not an employee at the time the report is procured or caused to be procured unless:

(i) A clear and prominent disclosure has been made in writing to the consumer before the report is procured or caused to be procured that a consumer report may be obtained for purposes of considering the consumer for employment; and

(ii) The consumer authorizes the procurement of the report.

(d)(i) Except as provided in (d)(ii) of this subsection, a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any employee unless the employee has received, at any time after the person became an employee, written notice that credit reports may be used for employment purposes.

(ii) (d)(i) of this subsection shall not apply with respect to a consumer report of an employee who the employer has reasonable cause to believe has engaged in specific activity that constitutes a violation of law.

(iii) A written statement that consumer reports may be used for employment purposes that is contained in employee guidelines or manuals available to employees or included in written materials provided to employees shall constitute written notice for purposes of (d)(i) of this subsection.

NEW SECTION. Sec. 5. (1) In cases of credit transactions not initiated by a consumer, and involving the intended extension of credit, or review or collection of the account of that consumer by prescreening, a consumer reporting agency may only provide a credit report or other credit information regarding that consumer if the following conditions are met:

(a) The consumer authorized the agency directly to provide the report or information; or

(b)(i) The consumer has received notice that information from the consumer's file may be used in connection with a prescreened transaction that is not initiated by the consumer and involves a firm offer of credit or business solicitation to the consumer; and

(ii) The consumer has had an opportunity to notify the agency, directly or indirectly, that the consumer does not consent to the use of information from the consumer's file in connection with any prescreened credit or business transaction that is not initiated by the consumer; and

(iii) The consumer has not notified the agency, directly or indirectly, of the lack of consent.

(2) Any consumer reporting agency that provides information intended to be used in a prescreened credit transaction not initiated by the consumer shall:

(a) Maintain a notification system that facilitates the ability of any consumer in the agency's data base to notify the agency to promptly withdraw the consumer's name from access by prescreeners; and

(b) Publish at least annually in a publication of general circulation in the area served by the agency, the address and toll-free telephone number for consumers to use to notify the agency of the consumer's election under this section.

(3) Any consumer reporting agency that maintains consumer reports on a nation-wide basis shall establish a system meeting the requirements of subsection (2) of this section on a nation-wide basis, and may operate such a system jointly with any other consumer reporting agencies.

(4) Compliance with the requirements of this section by any consumer reporting agency shall constitute compliance by the agency's affiliates.

NEW SECTION. Sec. 6. (1) Except as authorized under subsection (2) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:

(a) Bankruptcies that, from date of adjudication of the most recent bankruptcy, antedate the report by more than ten years;

(b) Suits and judgments that, 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 that antedate the report by more than seven years;

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

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

(2) The provisions of subsection (1) of this section are not applicable in the case of a consumer credit report to be used in connection with:

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

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

(c) The employment of any individual at an annual salary that equals, or that may reasonably be expected to equal, thirty thousand dollars or more.

NEW SECTION. Sec. 7. (1) A person may not procure or cause to be prepared an investigative consumer report on a consumer unless:

(a) It is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to the consumer's character, general reputation, personal characteristics, and mode of living, whichever are applicable, may be made, and the disclosure:

(i) Is made in a writing mailed, or otherwise delivered, to the consumer not later than three days after the date on which the report was first requested; and

(ii) Includes a statement informing the consumer of the consumer's right to request the additional disclosures provided for under subsection (2) of this section; or

(b) The report is to be used for employment purposes for which the consumer has not specifically applied.

(2) A person who procures or causes to be prepared an investigative consumer report on a consumer shall make, upon written request made by the consumer within a reasonable period of time after the receipt by the consumer of the disclosure required in subsection (1)(a) of this section, a complete and accurate disclosure of the nature and scope of the investigation requested. This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than the latter of five days after the date on which the request for the disclosure was either received from the consumer or the report was first requested.

(3) No person may be held liable for a violation of subsection (1) or (2) of this section if the person shows by a preponderance of the evidence that at the time of the violation the person maintained reasonable procedures to assure compliance with subsection (1) or (2) of this section.

(4) Each consumer reporting agency shall maintain a detailed record of:

(a) The identity of any person to whom an investigative consumer report or information from a consumer report is provided, including any person who receives such consumer report or uses any information contained in the report from the person to whom such report is provided by the agency;

(b) The certified purpose for which any investigative consumer report on any consumer, or any other information relating to any consumer, is requested by any person.

(5) Whenever a consumer reporting agency prepares an investigative consumer report, any adverse information in the consumer report, other than information which is a matter of public record, may not be included in a subsequent investigative consumer report unless the adverse information has been verified in the process of making the subsequent investigative consumer report or the adverse information was received within the three-month period preceding the date the subsequent report is furnished.

NEW SECTION. Sec. 8. (1) A consumer reporting agency shall maintain reasonable procedures designed to avoid violations of this chapter and to limit the furnishing of consumer reports to the purposes listed under section 4 of this act. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that the information will be used for no other purpose. A consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by the prospective user prior to furnishing the user a consumer report. No consumer reporting agency may furnish a consumer report to a person if the agency has reasonable grounds for believing that the consumer report will not be used for a purpose listed in section 4 of this act.

(2) 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.

(3) Notwithstanding the provisions of section 4 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.

(4) Each consumer reporting agency shall maintain a detailed record of:

(a) The identity of any person to whom a consumer report or information from a consumer report is provided, including any person who receives such consumer report or uses any information contained in the report from the person to whom such report is provided by the agency;

(b) The certified purpose for which any consumer report on any consumer, or any other information relating to any consumer, is requested by any person.

NEW SECTION. Sec. 9. (1) Consumer reporting agencies shall, upon request by the consumer, clearly and accurately disclose:

(a) All information in the file on the consumer, except that medical information may be withheld. The consumer shall be informed by the agency of the existence of any medical information and shall have the right to have that information disclosed to the health care provider of the consumer's choice. Nothing in this chapter shall be construed to prevent, or to authorize any consumer reporting agency to prevent, the health care provider from disclosing the medical information to the consumer. The agency shall inform the consumer of the right to disclosure of medical information at the time the consumer requests disclosure of his or her file.

(b) All items of information in its files on that consumer, including disclosure of the sources of such information, except that sources of information acquired solely for use in an investigative report may only be disclosed to a plaintiff under appropriate discovery procedures.

(2) A consumer shall be entitled to receive a copy of his or her consumer report, free of charge to the consumer, under the following circumstances:

(a) When the consumer report has been requested from a consumer reporting agency by a user, the consumer reporting agency shall send a copy of the consumer report to the consumer within one day of the consumer report being sent to the user, once each calendar year. The consumer report shall contain a notice indicating that the consumer report was generated in response to the named user's request for the consumer report in compliance with this section and shall state that the consumer is entitled to receive only one free consumer report each calendar year; or

(b) At the consumer's request once each calendar year.

(3) Except as provided in subsection (1)(a) or (b) of this section and section 12 of this act, the consumer reporting agency may charge a reasonable fee not to exceed five dollars to the consumer for furnishing a copy of the consumer's file. The fee shall be indicated to the consumer prior to making the disclosure.

(4) A consumer reporting agency is not required to send a copy of the consumer report to the consumer at the same time the report is sent to the user, apart from the provisions of subsection (1)(a) of this section.

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.

(2) The disclosures required under section 9 of this act shall be made to the consumer:

(a) In person if the consumer appears in person and furnishes proper identification;

(b) By telephone if the consumer has made a written request, with proper identification, for telephone disclosure; or

(3) A consumer reporting agency shall provide sufficient trained personnel to explain to the consumer information furnished to the consumer under section 9 of this act.

(4) The consumer shall be permitted to be accompanied by one other person of the consumer's 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 the other person's presence.

(5) If any credit score is provided by any credit reporting agency to any consumer, the agency shall provide a simple, brief explanation of the meaning of the credit score.

(6) Except as provided in sections 14 and 17 of this act, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency or any user of information, based on information disclosed under this section or section 9 of this act, except as to false information furnished with malice or willful intent to injure the consumer. Except as provided in sections 14 and 17 of this act, no consumer may bring any action or proceeding against a person who provides information to a consumer reporting agency in the nature of defamation, invasion of privacy, or negligence for unintentional error.

(7)(a) Any disclosure by any consumer reporting agency to any consumer pursuant to section 9 of this act shall include a simple, written, and readily understandable summary of all rights and remedies the consumer has under this chapter and a toll-free telephone number that the consumer can use to communicate with the agency.

(b) The summary of the rights and remedies of consumers under this chapter shall include:

(i) A brief description of this chapter and all rights and remedies of consumers under this chapter;

(ii) An explanation of how the consumer may best exercise the rights and remedies guaranteed under this chapter; and

(iii) A list of all state agencies responsible for enforcing any provision of this chapter, the address and any appropriate phone number of each such agency, and a brief description of the relevant enforcement responsibilities.

(8) A consumer reporting agency shall provide a sufficient number of adequately trained personnel to answer basic inquiries from consumers using the toll-free number required by this section.

NEW SECTION. Sec. 11. (1) If the completeness or accuracy of any item of information contained in any consumer's file at any consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly of such dispute, the agency shall reinvestigate and record the current status of the disputed information before the end of the thirty-day period beginning on the date the agency receives the notice from the consumer.

(2) Before the end of the five-day period beginning on the date a consumer reporting agency receives notice of a dispute from any consumer in accordance with subsection (1) of this section, the agency shall notify any person who provided any item of information in dispute.

(3)(a) Notwithstanding subsection (1) of this section, a consumer reporting agency may terminate a reinvestigation of information disputed by a consumer under subsection (1) of this section if the agency determines that the dispute by the consumer is frivolous or irrelevant.

(b) Upon making a determination in accordance with (a) of this subsection that a dispute is frivolous or irrelevant, a consumer reporting agency shall promptly notify the consumer in writing of the determination.

(4) In conducting a reinvestigation under subsection (1) of this section with respect to disputed information in the file of any consumer, the consumer reporting agency shall review and consider all relevant information submitted by the consumer with respect to the disputed information. The information shall include the consumer's written and oral statements and all documents including but not limited to canceled checks, invoices, billing statements, and correspondence. Written or documentary information provided by the consumer to the consumer reporting agency shall be forwarded by it to the person who has supplied the adverse information appearing in the consumer's file.

(5)(a) If, after a reinvestigation under subsection (1) of this section of any information disputed by a consumer, the information is found to be inaccurate or cannot be verified, the consumer reporting agency shall promptly delete such information from the consumer's file and mail written notice of the correction to the consumer, and to all other consumer reporting agencies that maintain individual data bases containing consumer report information. The obligation imposed in this section to notify other consumer reporting agencies about corrections does not authorize any other communications or contact among consumer reporting services.

(b)(i) If information is deleted from a consumer's file under (a) of this subsection, the information may not be reinserted in the file after the deletion unless the person who furnishes the information certifies that the information is complete and accurate.

(ii) If information that has been deleted from a consumer's file under (a) of this subsection is reinserted in the file in accordance with (b)(i) of this subsection, the consumer reporting agency shall promptly notify the consumer of the reinsertion.

(6)(a) A consumer reporting agency shall provide written notice of the results of a reinvestigation under this subsection within five business days of the completion of the reinvestigation.

(b) The notice required under (a) of this subsection shall include:

(i) A statement that the reinvestigation is completed;

(ii) A statement of the determination of the agency on the completeness or accuracy of the disputed information;

(iii) A description of the manner in which the information will appear, if at all, in any subsequent consumer report;

(iv) A description of the procedure used to determine the accuracy and completeness of the information, including the name, business address, and telephone number of any person contacted in connection with the information;

(v) If the agency has determined that the disputed information is accurate, a statement of the reasons for the determination; and

(vi) A summary of the consumer's rights.

NEW SECTION. Sec. 12. A consumer reporting agency shall make all disclosures under section 9 of this act and furnish all consumer reports pursuant to section 11 of this act without charge to the consumer if, within thirty days after receipt by the consumer of a notification by a consumer reporting agency, or notification from a debt collection agency affiliated with the consumer reporting agency, stating that the consumer's credit rating may be or has been adversely affected, the consumer makes a request under section 9 or 11 of this act. Otherwise, the consumer reporting agency may impose a reasonable charge as specified in section 9(3) of this act on the consumer for making disclosure to the consumer under section 9 of this act, the charge for which shall be indicated to the consumer prior to making disclosure.

NEW SECTION. Sec. 13. (1) If a credit grantor takes an adverse action with respect to a consumer that is based, in whole or in part, on information contained in a consumer report, the person shall:

(a) Provide written notice of the adverse action to the consumer;

(b) Provide the consumer with the name and address of the consumer reporting agency that furnished the report to the person and a toll-free telephone number that the consumer can use to communicate with the agency;

(c) Provide the consumer with a written summary of the rights and remedies of the consumer under this chapter, including:

(i) The right of the consumer to obtain a free copy of the consumer's report from the agency referred to in (b) of this subsection; and

(ii) The right of the consumer to challenge the accuracy or completeness of any information in the consumer's consumer report and the procedure for filing a dispute with respect to the information.

(2)(a) Any person who uses a consumer report, or information contained in a consumer report, in connection with a credit transaction that is not initiated by the consumer shall:

(i) Notify the consumer in writing that information contained in the consumer's consumer report was used in connection with the transaction;

(ii) Provide a clear and prominent statement with any solicitation made to the consumer that:

(A) The consumer has a right to prohibit information contained in the consumer's file with any consumer reporting agency to be used in connection transactions not initiated by the consumer; and

(B) Explains how the consumer may, in the exercise of the right referred to in (a)(ii)(A) of this subsection, have the consumer's files removed from consideration in connection with any credit transaction that the consumer has not initiated.

(b) Any statement provided under (a)(ii) of this subsection may contain an explanation of the consequences to the consumer for having denied consent to receive unsolicited solicitations for credit transactions not initiated by the consumer.

(3) Subsidiaries and affiliates of credit reporting agencies are not required to recomply with the notice provisions of this section if the consumer reporting agency has complied.

NEW SECTION. Sec. 14. An action to enforce any liability created under this chapter may be brought within the statute of limitations applicable to chapter 19.86 RCW, except that where a defendant has materially and willfully misrepresented any information required under this chapter to be disclosed to an individual and the information so misrepresented is material to the establishment of the defendant's liability to that individual under this chapter, the action may be brought at any time within four years after discovery by the individual of the misrepresentation.

NEW SECTION. Sec. 15. A person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses shall be fined not more than five thousand dollars or imprisoned not more than one year, or both.

NEW SECTION. Sec. 16. An officer or employee of a consumer reporting agency who knowingly and willfully provides information concerning an individual from the agency's files to a person not authorized to receive that information shall be fined not more than five thousand dollars or imprisoned not more than one year, or both.

NEW SECTION. Sec. 17. This chapter is a matter affecting the public interest for the purpose of applying chapter 19.86 RCW. The violation of the provisions under this chapter is not reasonable in relation to the development and preservation of business. Except for the penalties specified under sections 15 and 16 of this act, a violation of this chapter constitutes an unfair or deceptive act or practice in trade or commerce for the purpose of applying chapter 19.86 RCW.

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