S 1571

S‑1571.1 _____________________________________________

SUBSTITUTE SENATE BILL 5196

_____________________________________________

State of Washington 57th Legislature 2001 Regular Session

By Senate Committee on Labor, Commerce & Financial Institutions (originally sponsored by Senators Prentice and Winsley)

READ FIRST TIME 02/22/01.

_1 AN ACT Relating to the fair credit reporting act; amending RCW

_2 19.182.005, 19.182.010, 19.182.020, 19.182.080, 19.182.090,

_3 19.182.100, and 19.182.110; and adding a new section to chapter

_4 19.182 RCW.

_5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

_6 Sec. 1. RCW 19.182.005 and 1993 c 476 s 1 are each amended to read

_7 as follows:

_8 The legislature finds and declares that consumers have a vital

_9 interest in establishing and maintaining creditworthiness. The

10 legislature further finds that an elaborate mechanism using credit

11 reports and credit scores has developed for investigating and

12 evaluating a consumer's creditworthiness, credit capacity, and

13 general reputation and character. As such, credit reports and

14 credit scores are used for evaluating credit card, loan, mortgage,

15 and small business financing applications, as well as for

16 decisions regarding employment and the rental or leasing of

17 dwellings. Moreover, financial institutions and other creditors

18 depend upon fair and accurate credit reports and credit scores to

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_1 efficiently and accurately evaluate creditworthiness. Unfair or

_2 inaccurate reports and scores undermine both public and creditor

_3 confidences in the reliability of credit granting systems.

_4 Therefore, this chapter is necessary to assure accurate credit

_5 data collection, maintenance, and reporting on the citizens of the

_6 state. It is the policy of the state that credit reporting agencies

_7 maintain accurate credit reports and credit scores, resolve

_8 disputed reports promptly and fairly, and adopt reasonable

_9 procedures to promote consumer confidentiality and the proper use

10 of credit data in accordance with this chapter.

11 Sec. 2. RCW 19.182.010 and 1993 c 476 s 3 are each amended to read

12 as follows:

13 Unless the context clearly requires otherwise, the definitions

14 in this section apply throughout this chapter.

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

16 (i) Denial of, increase in any charge for, or reduction in the

17 amount of insurance for personal, family, or household purposes;

18 (ii) Denial of employment or any other decision for employment

19 purposes that adversely affects a current or prospective employee;

20 (iii) Action or determination with respect to a consumer's

21 application for credit that is adverse to the interests of the

22 consumer; and

23 (iv) Action or determination with respect to a consumer's

24 application for the rental or leasing of residential real estate

25 that is adverse to the interests of the consumer.

26 (b) "Adverse action" does not include:

27 (i) A refusal to extend additional credit under an existing

28 credit arrangement if:

29 (A) The applicant is delinquent or otherwise in default with

30 respect to the arrangement; or

31 (B) The additional credit would exceed a previously established

32 credit limit; or

33 (ii) A refusal or failure to authorize an account transaction

34 at a point of sale.

35 (2) "Attorney general" means the office of the attorney

36 general.

37 (3) "Consumer" means an individual.

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_1 (4)(a) "Consumer report" means a written, oral, or other

_2 communication of information by a consumer reporting agency

_3 bearing on a consumer's creditworthiness, credit standing, credit

_4 capacity, character, general reputation, personal characteristics,

_5 or mode of living that is used or expected to be used or collected

_6 in whole or in part for:

_7 (i) The purpose of serving as a factor in establishing the

_8 consumer's eligibility for credit or insurance to be used

_9 primarily for personal, family, or household purposes;

10 (ii) Employment purposes; or

11 (iii) Other purposes authorized under RCW 19.182.020.

12 (b) "Consumer report" does not include:

13 (i) A report containing information solely as to transactions

14 or experiences between the consumer and the person making the

15 report;

16 (ii) An authorization or approval of a specific extension of

17 credit directly or indirectly by the issuer of a credit card or

18 similar device;

19 (iii) A report in which a person who has been requested by a

20 third party to make a specific extension of credit directly or

21 indirectly to a consumer conveys his or her decision with respect

22 to the request, if the third party advises the consumer of the

23 name and address of the person to whom the request was made and

24 the person makes the disclosures to the consumer required under

25 RCW 19.182.070;

26 (iv) A list compiled by a consumer reporting agency to be used

27 by its client for direct marketing of goods or services not

28 involving an offer of credit;

29 (v) A report solely conveying a decision whether to guarantee a

30 check in response to a request by a third party; or

31 (vi) A report furnished for use in connection with a

32 transaction that consists of an extension of credit to be used for

33 a commercial purpose.

34 (5) "Consumer reporting agency" means a person who, for

35 monetary fees, dues, or on a cooperative nonprofit basis,

36 regularly engages in whole or in part in the business of

37 assembling or evaluating consumer credit information or other

38 information on consumers for the purpose of furnishing consumer

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_1 reports to third parties, and who uses any means or facility of

_2 commerce for the purpose of preparing or furnishing consumer

_3 reports. "Consumer reporting agency" does not include a person

_4 solely by reason of conveying a decision whether to guarantee a

_5 check in response to a request by a third party or a person who

_6 obtains a consumer report and provides the report or information

_7 contained in it to a subsidiary or affiliate of the person.

_8 (6) "Credit score" means a numerical value or a categorization

_9 derived from a statistical tool or modeling system used by a

10 person who makes or arranges a loan to predict the likelihood of

11 certain credit behaviors, including default. The numerical value or

12 the categorization derived from this analysis may also be referred

13 to as a risk predictor or risk score.

14 "Credit score" does not include any score or rating of an

15 automated underwriting system that considers one or more factors

16 in addition to credit information, including, but not limited to,

17 the loan to value ratio, the amount of down payment, consumer

18 income, period of employment, or a consumer's financial

19 assets. "Credit score" does not include other elements of the

20 underwriting process or underwriting decision.

21 (7) "Credit transaction that is not initiated by the consumer"

22 does not include the use of a consumer report by an assignee for

23 collection or by a person with which the consumer has an account,

24 for purposes of (a) reviewing the account, or (b) collecting the

25 account. For purposes of this subsection "reviewing the account"

26 includes activities related to account maintenance and monitoring,

27 credit line increases, and account upgrades and enhancements.

28 ((~~(7)~~)) (8) "Direct solicitation" means the process in which

29 the consumer reporting agency compiles or edits for a client a

30 list of consumers who meet specific criteria and provides this

31 list to the client or a third party on behalf of the client for

32 use in soliciting those consumers for an offer of a product or

33 service.

34 ((~~(8)~~)) (9) "Employment purposes," when used in connection with

35 a consumer report, means a report used for the purpose of

36 evaluating a consumer for employment, promotion, reassignment, or

37 retention as an employee.

38 ((~~(9)~~)) (10) "File," when used in connection with information

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_1 on any consumer, means all of the information on that consumer

_2 recorded and retained by a consumer reporting agency regardless of

_3 how the information is stored.

_4 ((~~(10)~~)) (11) "Investigative consumer report" means a consumer

_5 report or portion of it in which information on a consumer's

_6 character, general reputation, personal characteristics, or mode

_7 of living is obtained through personal interviews with neighbors,

_8 friends, or associates of the consumer reported on or with others

_9 with whom the consumer is acquainted or who may have knowledge

10 concerning any items of information. However, the information does

11 not include specific factual information on a consumer's credit

12 record obtained directly from a creditor of the consumer or from a

13 consumer reporting agency when the information was obtained

14 directly from a creditor of the consumer or from the consumer.

15 ((~~(11)~~)) (12) "Key factors" means all relevant elements or

16 reasons adversely affecting the credit score for the particular

17 individual listed in the order of their importance based on their

18 effect on the credit score.

19 (13) "Medical information" means information or records

20 obtained, with the consent of the individual to whom it relates,

21 from a licensed physician or medical practitioner, hospital,

22 clinic, or other medical or medically related facility.

23 ((~~(12)~~)) (14) "Person" includes an individual, corporation,

24 government or governmental subdivision or agency, business trust,

25 estate, trust, partnership, association, and any other legal or

26 commercial entity.

27 ((~~(13)~~)) (15) "Prescreening" means the process in which the

28 consumer reporting agency compiles or edits for a client a list of

29 consumers who meet specific credit criteria and provides this list

30 to the client or a third party on behalf of the client for use in

31 soliciting those consumers for an offer of credit.

32 Sec. 3. RCW 19.182.020 and 1993 c 476 s 4 are each amended to

33 read as follows:

34 (1) A consumer reporting agency may furnish a consumer report

35 or credit score only under the following circumstances:

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

37 issue the order;

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_1 (b) In accordance with the written instructions of the consumer

_2 to whom it relates; or

_3 (c) To a person that the agency has reason to believe:

_4 (i) Intends to use the information in connection with a credit

_5 transaction involving the consumer on whom the information is to

_6 be furnished and involving the extension of credit to, or review

_7 or collection of an account of, the consumer;

_8 (ii) Intends to use the information for employment purposes;

_9 (iii) Intends to use the information in connection with the

10 underwriting of insurance involving the consumer;

11 (iv) Intends to use the information in connection with a

12 determination of the consumer's eligibility for a license or other

13 benefit granted by a governmental instrumentality required by law

14 to consider an applicant's financial responsibility or status; or

15 (v) Otherwise has a legitimate business need for the

16 information in connection with a business transaction involving

17 the consumer.

18 (2)(a) A person may not procure a consumer report, or cause a

19 consumer report to be procured, for employment purposes with

20 respect to any consumer who is not an employee at the time the

21 report is procured or caused to be procured unless:

22 (i) A clear and conspicuous disclosure has been made in writing

23 to the consumer before the report is procured or caused to be

24 procured that a consumer report may be obtained for purposes of

25 considering the consumer for employment. The disclosure may be

26 contained in a written statement contained in employment

27 application materials; or

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

29 (b) A person may not procure a consumer report, or cause a

30 consumer report to be procured, for employment purposes with

31 respect to any employee unless the employee has received, at any

32 time after the person became an employee, written notice that

33 consumer reports may be used for employment purposes. A written

34 statement that consumer reports may be used for employment

35 purposes that is contained in employee guidelines or manuals

36 available to employees or included in written materials provided

37 to employees constitutes written notice for purposes of this

38 subsection. This subsection does not apply with respect to a

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_1 consumer report of an employee who the employer has reasonable

_2 cause to believe has engaged in specific activity that constitutes

_3 a violation of law.

_4 (c) In using a consumer report for employment purposes, before

_5 taking any adverse action based in whole or part on the report, a

_6 person shall provide to the consumer to whom the report relates:

_7 (i) The name, address, and telephone number of the consumer

_8 reporting agency providing the report; (ii) a description of the

_9 consumer's rights under this chapter pertaining to consumer

10 reports obtained for employment purposes; and (iii) a reasonable

11 opportunity to respond to any information in the report that is

12 disputed by the consumer.

13 NEW SECTION. Sec. 4. A new section is added to chapter 19.182

14 RCW to read as follows:

15 (1) Upon the consumer's request for a credit score, a consumer

16 reporting agency must supply to the consumer a notice that

17 includes the following information:

18 (a) The consumer's current credit score or the consumer's most

19 recent credit score that was previously calculated by the consumer

20 reporting agency for the purpose related to the extension of

21 credit;

22 (b) The range of possible credit scores under the model used;

23 (c) All the key factors that adversely affected the consumer's

24 credit score in the model used, the total number of which must not

25 exceed four;

26 (d) The date the credit score was created;

27 (e) A statement that the credit score and credit score model

28 used by the consumer reporting agency may be different from the

29 credit underwriting system used by a lender; and

30 (f) The name of the person or entity that provided the credit

31 score or credit file upon which the credit score was created.

32 (2) This section must not be construed to require a consumer

33 reporting agency that distributes credit scores developed by

34 another person or entity to provide further explanation of them or

35 to process a dispute regarding such scores under RCW 19.182.090,

36 except that the consumer reporting agency must provide the

37 consumer with the name and address and web site for contacting the

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_1 person or entity who developed the score or developed the

_2 methodology of the score. This subsection does not apply to a

_3 consumer reporting agency that develops or modifies scores that

_4 are developed by another person or entity.

_5 (3) If a consumer reporting agency does not develop or maintain

_6 credit scores in its files, nothing in this section may be

_7 construed to require the agency to develop or disclose such

_8 scores.

_9 Sec. 5. RCW 19.182.080 and 1993 c 476 s 10 are each amended to

10 read as follows:

11 (1) A consumer reporting agency shall make the disclosures

12 required under RCW 19.182.070 during normal business hours and on

13 reasonable notice.

14 (2) The consumer reporting agency shall make the disclosures

15 required under RCW 19.182.070 to the consumer:

16 (a) In person if the consumer appears in person and furnishes

17 proper identification;

18 (b) By telephone if the consumer has made a written request,

19 with proper identification, for telephone disclosure and the toll

20 charge, if any, for the telephone call is prepaid by or charged

21 directly to the consumer; or

22 (c) By any other reasonable means that are available to the

23 consumer reporting agency if that means is authorized by the

24 consumer.

25 (3) A consumer reporting agency shall provide trained personnel

26 to explain to the consumer, information furnished to the consumer

27 under RCW 19.182.070.

28 (4) The consumer reporting agency shall permit the consumer to

29 be accompanied by one other person of the consumer's choosing, who

30 shall furnish reasonable identification. A consumer reporting

31 agency may require the consumer to furnish a written statement

32 granting permission to the consumer reporting agency to discuss

33 the consumer's file in the other person's presence.

34 (5) If a credit score is provided by a consumer reporting

35 agency to a consumer, the agency shall provide an explanation of

36 the meaning of the credit score under section 4 of this act.

37 (6) Except as provided in RCW 19.182.150, no consumer may bring

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_1 an action or proceeding in the nature of defamation, invasion of

_2 privacy, or negligence with respect to the reporting of

_3 information against a consumer reporting agency or a user of

_4 information, based on information disclosed under this section or

_5 RCW 19.182.070, except as to false information furnished with

_6 malice or willful intent to injure the consumer. Except as provided

_7 in RCW 19.182.150, no consumer may bring an action or proceeding

_8 against a person who provides information to a consumer reporting

_9 agency in the nature of defamation, invasion of privacy, or

10 negligence for unintentional error.

11 (7)(a) A consumer reporting agency must provide to a consumer,

12 with each written disclosure by the agency to the consumer under

13 RCW 19.182.070, a written summary of all rights and remedies the

14 consumer has under this chapter.

15 (b) The summary of the rights and remedies of consumers under

16 this chapter must include:

17 (i) A brief description of this chapter and all rights and

18 remedies of consumers under this chapter;

19 (ii) An explanation of how the consumer may exercise the rights

20 and remedies of the consumer under this chapter; and

21 (iii) A list of all state agencies, including the attorney

22 general's office, responsible for enforcing any provision of this

23 chapter and the address, web site, and appropriate phone number of

24 each such agency.

25 Sec. 6. RCW 19.182.090 and 1993 c 476 s 11 are each amended to

26 read as follows:

27 (1) If the completeness or accuracy of an item of information

28 contained in a consumer's file at a consumer reporting agency is

29 disputed by the consumer and the consumer notifies the agency

30 directly of the dispute, the agency shall reinvestigate without

31 charge and record the current status of the disputed information

32 before the end of thirty business days, beginning on the date the

33 agency receives the notice from the consumer.

34 (2) Before the end of the five business-day period beginning on

35 the date a consumer reporting agency receives notice of a dispute

36 from a consumer in accordance with subsection (1) of this section,

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_1 the agency shall notify any person who provided an item of

_2 information in dispute.

_3 (3)(a) Notwithstanding subsection (1) of this section, a

_4 consumer reporting agency may terminate a reinvestigation of

_5 information disputed by a consumer under subsection (1) of this

_6 section if the agency determines that the dispute by the consumer

_7 is frivolous or irrelevant, including by reason of a failure of

_8 the consumer to provide sufficient information.

_9 (b) Upon making a determination in accordance with (a) of this

10 subsection that a dispute is frivolous or irrelevant, a consumer

11 reporting agency shall notify the consumer within five business

12 days of the determination. The notice shall be made in writing or

13 any other means authorized by the consumer that are available to

14 the agency, but the notice shall include the reasons for the

15 determination and a notice of the consumer's rights under

16 subsection (6) of this section.

17 (4) In conducting a reinvestigation under subsection (1) of

18 this section with respect to disputed information in the file of

19 any consumer, the consumer reporting agency shall review and

20 consider all relevant information submitted by the consumer in the

21 period described in subsection (1) of this section with respect to

22 the disputed information.

23 (5)(a) If, after a reinvestigation under subsection (1) of this

24 section of information disputed by a consumer, the information is

25 found to be inaccurate or cannot be verified, the consumer

26 reporting agency shall promptly delete the information from the

27 consumer's file.

28 (b)(i) If information is deleted from a consumer's file under

29 (a) of this subsection, the information may not be reinserted in

30 the file after the deletion unless the person who furnishes the

31 information verifies that the information is complete and

32 accurate.

33 (ii) If information that has been deleted from a consumer's

34 file under (a) of this subsection is reinserted in the file in

35 accordance with (b)(i) of this subsection, the consumer reporting

36 agency shall notify the consumer of the reinsertion within thirty

37 business days. The notice shall be in writing or any other means

38 authorized by the consumer that are available to the agency.

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_1 (6) If the reinvestigation does not resolve the dispute or if

_2 the consumer reporting agency determines the dispute is frivolous

_3 or irrelevant, the consumer may file a brief statement setting

_4 forth the nature of the dispute. The consumer reporting agency may

_5 limit these statements to not more than one hundred words if it

_6 provides the consumer with assistance in writing a clear summary

_7 of the dispute.

_8 (7) After the deletion of information from a consumer's file

_9 under this section or after the filing of a statement of dispute

10 under subsection (6) of this section, the consumer reporting

11 agency shall, at the request of the consumer, furnish notification

12 that the item of information has been deleted or that item of

13 information is disputed. In the case of disputed information, the

14 notification shall include the statement filed under subsection

15 (6) of this section. The notification shall be furnished to any

16 person specifically designated by the consumer, who has, within

17 two years before the deletion or filing of a dispute, received a

18 consumer report concerning the consumer for employment purposes,

19 or who has, within six months of the deletion or the filing of the

20 dispute, received a consumer report concerning the consumer for

21 any other purpose, if these consumer reports contained the deleted

22 or disputed information.

23 (8)(a) Upon completion of the reinvestigation under this

24 section, a consumer reporting agency shall provide notice, in

25 writing or by any other means authorized by the consumer, of the

26 results of a reinvestigation within five business days.

27 (b) The notice required under (a) of this subsection must

28 include:

29 (i) A statement that the reinvestigation is completed;

30 (ii) A consumer report that is based upon the consumer's file

31 as that file is revised as a result of the reinvestigation;

32 (iii) A description or indication of any changes made in the

33 consumer report as a result of those revisions to the consumer's

34 file;

35 (iv) If requested by the consumer, a description of the

36 procedure used to determine the accuracy and completeness of the

37 information shall be provided to the consumer by the agency,

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_1 including the name, business address, and telephone number of any

_2 person contacted in connection with the information;

_3 (v) If the reinvestigation does not resolve the dispute, a

_4 summary of the consumer's right to file a brief statement as

_5 provided in subsection (6) of this section; and

_6 (vi) If information is deleted or disputed after

_7 reinvestigation, a summary of the consumer's right to request

_8 notification to persons who have received a consumer report as

_9 provided in subsection (7) of this section.

10 (9) In the case of a consumer reporting agency that compiles

11 and maintains consumer reports and credit scores on a nationwide

12 basis, the consumer reporting agency must provide to a consumer

13 who has undertaken to dispute the information contained in his or

14 her file a toll-free telephone number and a web site address that

15 the consumer can use to communicate with the agency. A consumer

16 reporting agency that provides a toll-free number and a web site

17 address required by this subsection shall also provide adequately

18 trained personnel to answer basic inquiries from consumers using

19 the toll-free number and web site.

20 Sec. 7. RCW 19.182.100 and 1993 c 476 s 12 are each amended to

21 read as follows:

22 (1) Except as provided in subsections (2) and (3) of this

23 section, a consumer reporting agency may charge the following fees

24 to the consumer:

25 (a) For making a disclosure under RCW 19.182.070 and

26 19.182.080, the consumer reporting agency may charge a fee not

27 exceeding eight dollars. Beginning January 1, 1995, the eight-

28 dollar charge may be adjusted on January 1st of each year based on

29 corresponding changes in the consumer price index with fractional

30 changes rounded to the nearest half dollar. For making a disclosure

31 of a credit score under section 4 of this act, the consumer

32 reporting agency may charge a reasonable amount.

33 (b) For furnishing a notification, statement, or summary to a

34 person under RCW 19.182.090(7), the consumer reporting agency may

35 charge a fee not exceeding the charge that the agency would impose

36 on each designated recipient for a consumer report. The amount of

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_1 any charge must be disclosed to the consumer before furnishing the

_2 information.

_3 (2) A consumer reporting agency shall make all disclosures

_4 under RCW 19.182.070 and 19.182.080 and furnish all consumer

_5 reports under RCW 19.182.090 without charge, if requested by the

_6 consumer within sixty days after receipt by the consumer of a

_7 notification of adverse action under RCW 19.182.110 or of a

_8 notification from a debt collection agency affiliated with that

_9 consumer reporting agency stating that the consumer's credit

10 rating may be or has been adversely affected.

11 (3) A consumer reporting agency shall not impose any charge for

12 (a) providing notice to a consumer required under RCW 19.182.090,

13 or (b) notifying a person under RCW 19.182.090(7) of the deletion

14 of information that is found to be inaccurate or that can no

15 longer be verified, if the consumer designates that person to the

16 agency before the end of the thirty-day period beginning on the

17 date of notice under RCW 19.182.090(8).

18 Sec. 8. RCW 19.182.110 and 1993 c 476 s 13 are each amended to

19 read as follows:

20 If a person takes an adverse action with respect to a consumer

21 that is based, in whole or in part, on information contained in a

22 consumer report or credit score, the person shall:

23 (1) Provide written notice of the adverse action to the

24 consumer, except verbal notice may be given by a person in an

25 adverse action involving a business regulated by the Washington

26 utilities and transportation commission or involving an

27 application for the rental or leasing of residential real estate

28 if such verbal notice does not impair a consumer's ability to

29 obtain a credit report without charge under RCW 19.182.100(2); and

30 (2) Provide the consumer with the name, address, and telephone

31 number of the consumer reporting agency that furnished the report

32 or credit score to the person.

‑‑‑ END ‑‑‑

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