BILL REQ. #:  H-0944.1 

Read first time 01/22/2007.   Referred to Committee on Insurance, Financial Service & Consumer Protection.

     AN ACT Relating to the accuracy and completeness of information available in background check reports; and amending RCW 19.182.005, 19.182.010, 19.182.040, and 19.182.070.

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

Sec. 1   RCW 19.182.005 and 1993 c 476 s 1 are each amended to read as follows:
     The federal fair credit reporting act (15 U.S.C. Sec. 1681 et seq.) requires that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner that is fair and equitable to the consumer with regard to the confidentiality, accuracy, and proper utilization of information contained in consumer reports.
     The legislature finds and declares that consumers have a vital interest in establishing and maintaining creditworthiness. The legislature further finds that an elaborate mechanism using credit reports has developed for investigating and evaluating a consumer's creditworthiness, credit capacity, and general reputation and character. As such, credit reports are used for evaluating credit card, loan, mortgage, and small business financing applications, as well as for decisions regarding employment and the rental or leasing of dwellings. Moreover, financial institutions and other creditors depend upon fair and accurate credit reports to efficiently and accurately evaluate creditworthiness. Unfair or inaccurate reports undermine both public and creditor confidences in the reliability of credit granting systems.
     The legislature finds and declares that consumers also have a vital interest in maintaining their general reputation and character. The legislature finds there has been an increased reliance on background information obtained from web-based information brokers. This practice increases the possibility of inaccurate reports. In order to ensure the accuracy and completeness of this information, the legislature finds that the provisions of this chapter also apply to background checks.
     Therefore, this chapter is necessary to ((assure)) ensure accurate ((credit)) data collection, maintenance, and reporting on the citizens of the state. It is the policy of the state that ((credit)) consumer reporting agencies maintain accurate information and credit reports, resolve disputed reports promptly and fairly, and adopt reasonable procedures to promote consumer confidentiality and the proper use of ((credit)) data in accordance with ((this chapter)) federal and state law.

Sec. 2   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 unless the context clearly requires otherwise.
     (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" includes both investigative consumer or background check reports and credit reports.
     (c) "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 background check or 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.

Sec. 3   RCW 19.182.040 and 1993 c 476 s 6 are each amended to read as follows:
     (1) Except as authorized under subsection (2) of this section, no consumer reporting agency may make a 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;
     (c) Paid tax liens that, from date of payment, antedate the report by more than seven years;
     (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))) Records of a conviction that have been vacated;
     (f) Any other adverse item of information that antedates the report by more than seven years.
     (2) Subsection (1) of this section is not applicable in the case of a consumer 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; or
     (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 an individual at an annual salary that equals, or that may reasonably be expected to equal, twenty thousand dollars or more)).

Sec. 4   RCW 19.182.070 and 1993 c 476 s 9 are each amended to read as follows:
     (1) A consumer reporting agency shall, upon request and proper identification by the consumer, clearly and accurately disclose:
     (((1))) (a) All information in the file on the consumer at the time of request, except that medical information may be withheld. The agency shall inform the consumer of the existence of medical information, and the consumer has the right to have that information disclosed to the health care provider of the consumer's choice. Nothing in this chapter prevents, or authorizes a 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.
     (((2))) (b) All items of information in its files on that consumer, including disclosure of the sources of the 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.
     (((3))) (c) Identification of (((a))) (i) each person who for employment purposes within the two-year period before the request, and (((b))) (ii) each person who for any other purpose within the six-month period before the request, procured a consumer report.
     (((4))) (d) A record identifying all inquiries received by the agency in the six-month period before the request that identified the consumer in connection with a credit transaction that is not initiated by the consumer.
     (((5))) (e) An identification of a person under ((subsection (3))) (c) or (((4))) (d) of this subsection must include (((a))) (i) the name of the person or, if applicable, the trade name under which the person conducts business; and (((b))) (ii) upon request of the consumer, the address of the person.
     (2) An employer who relies on a consumer report to support an adverse action shall provide:
     (a) The consumer with a preadverse action disclosure that includes a copy of the consumer's consumer report and a summary of the consumer's rights;
     (b) Notice of the adverse action in writing;
     (c) The name, address, and phone number of the consumer reporting agency that supplied the report; and
     (d) Notice of the consumer's right to dispute the accuracy or completeness of any information the agency furnished, and the consumer's right to an additional consumer report from the agency upon request within sixty days.
     (3) A consumer may be charged a reasonable fee for the reproduction of materials in this section, with the exception of the consumer report, which must be provided at no cost to the consumer.