BILL REQ. #:  H-0076.2 

Read first time 01/25/2005.   Referred to Committee on Financial Institutions & Insurance.

     AN ACT Relating to placing limitations on the release of consumer information by consumer reporting agencies; amending RCW 19.182.010; adding new sections to chapter 19.182 RCW; and prescribing penalties.

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

Sec. 1   RCW 19.182.010 and 1993 c 476 s 3 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1)(a) "Adverse action" includes:
     (i) Denial of, increase in any charge for, or reduction in the amount of insurance for personal, family, or household purposes;
     (ii) Denial of employment or any other decision for employment purposes that adversely affects a current or prospective employee;
     (iii) Action or determination with respect to a consumer's application for credit that is adverse to the interests of the consumer; and
     (iv) Action or determination with respect to a consumer's application for the rental or leasing of residential real estate that is adverse to the interests of the consumer.
     (b) "Adverse action" does not include:
     (i) A refusal to extend additional credit under an existing credit arrangement if:
     (A) The applicant is delinquent or otherwise in default with respect to the arrangement; or
     (B) The additional credit would exceed a previously established credit limit; or
     (ii) A refusal or failure to authorize an account transaction at a point of sale.
     (2) "Attorney general" means the office of the attorney general.
     (3) "Consumer" means an individual.
     (4)(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:
     (i) The purpose of serving as a factor in establishing the consumer's eligibility for credit or insurance to be used primarily for personal, family, or household purposes;
     (ii) Employment purposes; or
     (iii) Other purposes authorized under RCW 19.182.020.
     (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;
     (iii) A 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 his or her decision with respect to the request, if the third party advises the consumer of the name and address of the person to whom the request was made and the person makes the disclosures to the consumer required under RCW 19.182.070;
     (iv) A list compiled by a consumer reporting agency to be used by its client for direct marketing of goods or services not involving an offer of credit;
     (v) A report solely conveying a decision whether to guarantee a check in response to a request by a third party; or
     (vi) A report furnished for use in connection with a transaction that consists of an extension of credit to be used for a commercial purpose.
     (5) "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 business 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 a person solely by reason of conveying a decision whether to guarantee a check in response to a request by a third party or a person who obtains a consumer report and provides the report or information contained in it to a subsidiary or affiliate of the person.
     (6) "Credit transaction that is not initiated by the consumer" does not include the use of a consumer report by an assignee for collection or by a person with which the consumer has an account, for purposes of (a) reviewing the account, or (b) collecting the account. For purposes of this subsection "reviewing the account" includes activities related to account maintenance and monitoring, credit line increases, and account upgrades and enhancements.
     (7) "Direct solicitation" means the process in which the consumer reporting agency compiles or edits for a client a list of consumers who meet specific criteria and provides this list to the client or a third party on behalf of the client for use in soliciting those consumers for an offer of a product or service.
     (8) "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.
     (9) "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.
     (10) "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.
     (11) "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.
     (12) "Person" includes an individual, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal or commercial entity.
     (13) "Prescreening" means the process in which the consumer reporting agency compiles or edits for a client a list of consumers who meet specific credit criteria and provides this list to the client or a third party on behalf of the client for use in soliciting those consumers for an offer of credit.
     (14) "Security freeze" means a notice placed in a consumer's credit report, at the request of the consumer, that prohibits a consumer reporting agency from releasing the consumer's credit report or any information from it, except in accordance with specified exceptions, without the express authorization of the consumer.

NEW SECTION.  Sec. 2   A new section is added to chapter 19.182 RCW to read as follows:
     (1) A consumer may elect to place a security freeze on his or her credit report by making a request in writing by certified mail to a consumer reporting agency. If a security freeze is in place, information from a consumer's credit report may not be released to a third party without prior express authorization from the consumer. This subsection does not prohibit a consumer reporting agency from advising a third party that a security freeze is in effect with respect to the consumer's credit report.
     (2) A consumer reporting agency shall place a security freeze on a consumer's credit report no later than five business days after receiving a written request from the consumer.
     (3) The consumer reporting agency shall send a written confirmation of the security freeze to the consumer within ten business days and shall provide the consumer with a unique personal identification number or password to be used by the consumer when providing authorization for the release of his or her credit for a specific party or period of time.
     (4) If the consumer wishes to allow his or her credit report to be accessed for a specific party or period of time while a freeze is in place, he or she shall contact the consumer reporting agency, request that the freeze be temporarily lifted, and provide the following:
     (a) Proper identification, which shall consist of information generally deemed sufficient to identify a person. If the consumer is unable to reasonably identify himself or herself with this information, a consumer reporting agency may require additional information concerning the consumer's employment and personal or family history in order to verify his or her identity;
     (b) The unique personal identification number or password provided by the consumer reporting agency under subsection (3) of this section; and
     (c) Information adequate for the identification of the third party who is to receive the credit report and/or the time period during which the report shall be available to users of the credit report.
     (5) A consumer reporting agency that receives a request from a consumer to temporarily lift a freeze on a credit report under subsection (4) of this section shall comply with the request no later than three business days after receiving the request.
     (6) A consumer reporting agency may develop procedures involving the use of telephone, fax, internet, or other electronic media to receive and process a request from a consumer to temporarily lift a freeze on a credit report under subsection (4) of this section in an expedited manner.
     (7) A consumer reporting agency shall remove or temporarily lift a freeze placed on a consumer's credit report only in the following cases:
     (a) Upon consumer request, under subsection (4) or (10) of this section; or
     (b) If the consumer's credit report was frozen due to a material misrepresentation of fact by the consumer. If a consumer reporting agency intends to remove a freeze upon a consumer's credit report under this subsection, the consumer reporting agency shall notify the consumer in writing prior to removing the freeze on the consumer's credit report.
     (8) If a third party requests access to a consumer credit report that is subject to a security freeze, and this request is in connection with an application for credit or any other use, and the consumer does not allow his or her credit report to be accessed by that specific party or during that period of time, the third party may treat the application as incomplete.
     (9) If a consumer requests a security freeze, the consumer reporting agency shall disclose to the consumer the process of placing and temporarily lifting a freeze, and the process for allowing access to information from the consumer's credit report for a specific party or period of time while the freeze is in place.
     (10) A security freeze shall remain in place until the consumer requests that the security freeze be removed. A consumer reporting agency shall remove a security freeze within three business days of receiving a request for removal from the consumer, who provides both of the following:
     (a) Proper identification, as described under subsection (4)(a) of this section; and
     (b) The unique personal identification number or password provided by the consumer reporting agency under subsection (3) of this section.
     (11) A consumer reporting agency shall require proper identification from the person making a request to place or remove a security freeze, as described under subsection (4)(a) of this section.
     (12) This section does not apply to the use of a consumer report by any of the following:
     (a) A person or entity, or a subsidiary, affiliate, or agent of that person or entity, or an assignee of a financial obligation owing by the consumer to that person or entity, or a prospective assignee of a financial obligation owing by the consumer to that person or entity in conjunction with the proposed purchase of the financial obligation, with which the consumer has or had prior to assignment an account or contract, including a demand deposit account, or to whom the consumer issued a negotiable instrument, for the purposes of reviewing the account or collecting the financial obligation owing for the account, contract, or negotiable instrument. For purposes of this subsection, "reviewing the account" includes activities related to account maintenance, monitoring, credit line increases, and account upgrades and enhancements;
     (b) A subsidiary, affiliate, agent, assignee, or prospective assignee of a person to whom access has been granted under subsection (4) of this section for purposes of facilitating the extension of credit or other permissible use;
     (c) Any state or local agency, law enforcement agency, trial court, or private collection agency acting under a court order, warrant, or subpoena;
     (d) The department of social and health services or other designated public agency acting pursuant to chapter 74.20 RCW or Title IV-D of the social security act (42 U.S.C. et seq.) with respect to the collection of child support;
     (e) The department of revenue or its agents or assigns acting to investigate or collect delinquent taxes or unpaid court orders or to fulfill any of its other statutory responsibilities;
     (f) The use of credit information for the purposes of prescreening;
     (g) Any person or entity administering a credit file monitoring subscription service to which the consumer has subscribed; or
     (h) Any person or entity for the purpose of providing a consumer with a copy of his or her credit report upon the consumer's request.
     (13) This section does not prevent a consumer reporting agency from charging a reasonable fee, not to exceed ten dollars, to a consumer who elects to impose a security freeze, remove a security freeze, or temporarily lift a security freeze. A consumer reporting agency may not charge a fee for the imposition of a security freeze with respect to the victim of the crime of identity theft under RCW 9.35.020, who has reported such crime to a law enforcement agency and who provides proof of such report to the consumer reporting agency.

NEW SECTION.  Sec. 3   A new section is added to chapter 19.182 RCW to read as follows:
     If a security freeze is in place, a consumer reporting agency shall not change any of the following official information in a consumer report without sending a written confirmation of the change to the consumer within thirty days of the change being posted to the consumer's file: Name, date of birth, social security number, and address. Written confirmation is not required for technical modifications of a consumer's official information, including name and street abbreviations, complete spellings, or transposition of numbers or letters. In the case of an address change, the written confirmation shall be sent to both the new address and to the former address.

NEW SECTION.  Sec. 4   A new section is added to chapter 19.182 RCW to read as follows:
     The following entities are not required to place a security freeze on a consumer report:
     (1) A check services or fraud prevention services company, which issues reports on incidents of fraud or authorizations for the purpose of approving or processing negotiable instruments, electronic funds transfers, or similar methods of payments; or
     (2) A demand deposit account information service company, which issues reports regarding account closures due to fraud, substantial overdrafts, ATM abuse, or similar negative information regarding a consumer, to inquiring banks or other financial institutions for use only in reviewing a consumer request for a demand deposit account at the inquiring bank or financial institution.

NEW SECTION.  Sec. 5   A new section is added to chapter 19.182 RCW to read as follows:
     (1) Any consumer who suffers damages as a result of a violation of this chapter by any person may bring an action in a court of appropriate jurisdiction against that person to recover the following:
     (a) In the case of a negligent violation, actual damages, including court costs, loss of wages, attorneys' fees and, when applicable, pain and suffering.
     (b) In the case of a willful violation:
     (i) Actual damages as set forth in (a) of this subsection;
     (ii) Punitive damages of not less than one hundred dollars nor more than five thousand dollars for each violation; and
     (iii) Any other relief that the court deems proper.
     (c) With respect to a person who obtains a consumer report under false pretenses or for a purpose other than those allowed under this chapter, an award of actual damages pursuant to (a) or (b)(i) of this subsection shall be in an amount of not less than two thousand five hundred dollars.
     (2) Injunctive relief shall be available to any consumer aggrieved by a violation or a threatened violation of this chapter whether or not the consumer seeks any other remedy under this section.
     (3) Notwithstanding any other provision of this section, any person who willfully violates any requirement imposed under this chapter may be liable for punitive damages in the case of a class action, in an amount that the court may allow. In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual damages awarded, the frequency of the violations, the resources of the violator, and the number of persons adversely affected.
     (4) The prevailing plaintiffs in any action commenced under this section shall be entitled to recover court costs and reasonable attorneys' fees.

NEW SECTION.  Sec. 6   A new section is added to chapter 19.182 RCW to read as follows:
     An action to enforce any liability created under this chapter may be brought in an appropriate court of competent jurisdiction within two years from the date the plaintiff knew of, or should have known of, the violation of this chapter, but not more than seven years from the earliest date on which liability could have arisen, except that where a defendant has materially and willfully misrepresented any information required under this chapter to be disclosed to a consumer and the information so misrepresented is material to the establishment of the defendant's liability to the consumer under this chapter, the action may be brought at any time within two years after the discovery by the consumer of the misrepresentation.