Read first time 01/24/2005.   Referred to Committee on Financial Institutions, Housing & Consumer Protection.

     AN ACT Relating to placing a security freeze on a credit report; and adding new sections to chapter 19.182 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 19.182 RCW to read as follows:
     (1) A victim of identity theft who has submitted a valid police report to a consumer reporting agency may elect to place a security freeze on his or her report by making a request in writing by certified mail to a consumer reporting agency. "Security freeze" means a notice placed in a consumer's credit report, at the request of the consumer and subject to certain exceptions, that prohibits the consumer reporting agency from releasing the consumer's credit report or any information from it without the express authorization of the consumer. 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 prevent 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) For purposes of this section and sections 2 through 5 of this act, a "victim of identity theft" means:
     (a) A victim of identity theft as defined in RCW 9.35.020; or
     (b) A person who has been notified by an agency, person, or business that owns or licenses computerized data of a breach in a computerized data system which has resulted in the acquisition of that person's unencrypted personal information by an unauthorized person or entity.
     (3) 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.
     (4) 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 report for a specific party or period of time.
     (5) 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 means that information generally deemed sufficient to identify a person. Only if the consumer is unable to sufficiently identify himself or herself, may a consumer reporting agency 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 credit reporting agency under subsection (4) of this section; and
     (c) The proper information regarding the third party who is to receive the credit report or the time period for which the report is available to users of the credit report.
     (6) A consumer reporting agency that receives a request from a consumer to temporarily lift a freeze on a credit report under subsection (5) of this section, shall comply with the request no later than three business days after receiving the request.
     (7) A consumer reporting agency may develop procedures involving the use of telephone, fax, the 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 (5) of this section in an expedited manner.
     (8) 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 (5) or (11) of this section; or
     (b) When the consumer's credit report was frozen due to a material misrepresentation of fact by the consumer. When 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.
     (9) When a third party requests access to a consumer credit report on which a security freeze is in effect, 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 for that specific party or period of time, the third party may treat the application as incomplete.
     (10) When a consumer requests a security freeze, the consumer reporting agency shall disclose 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.
     (11) A security freeze remains 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 defined in subsection (5)(a) of this section; and
     (b) The unique personal identification number or password provided by the consumer reporting agency under subsection (4) of this section.
     (12) This section does not apply to the use of a consumer credit 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 (5) of this section for purposes of facilitating the extension of credit or other permissible use;
     (c) Any federal, state, or local entity, including a law enforcement agency, court, or their agents or assigns;
     (d) A private collection agency acting under a court order, warrant, or subpoena;
     (e) A child support agency acting under Title IV-D of the social security act (42 U.S.C. et seq.);
     (f) The department of social and health services acting to fulfill any of its statutory responsibilities;
     (g) The internal revenue service acting to investigate or collect delinquent taxes or unpaid court orders or to fulfill any of its other statutory responsibilities;
     (h) The use of credit information for the purposes of prescreening as provided for by the federal fair credit reporting act;
     (i) Any person or entity administering a credit file monitoring subscription service to which the consumer has subscribed; and
     (j) 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.

NEW SECTION.  Sec. 2   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 may not change any of the following official information in a consumer credit 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. 3   A new section is added to chapter 19.182 RCW to read as follows:
     A consumer reporting agency is not required to place a security freeze in a consumer credit report under section 1 of this act if it acts only as a reseller of credit information by assembling and merging information contained in the data base of another consumer reporting agency or multiple consumer reporting agencies, and does not maintain a permanent data base of credit information from which new consumer credit reports are produced. However, a consumer reporting agency must honor any security freeze placed on a consumer credit report by another consumer reporting agency.

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 in a consumer credit report under section 1 of this act:
     (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; and
     (2) A 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 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:
     A consumer reporting agency may furnish to a governmental agency a consumer's name, address, former address, places of employment, or former places of employment.