SB2310 94TH GENERAL ASSEMBLY

LRB094 16851 LCT 52130 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB2310

Introduced 1/12/2006, by Sen. John J. Cullerton

SYNOPSIS AS INTRODUCED:

815 ILCS 505/2MM

Amends the Consumer Fraud and Deceptive Business Practices Act. Provides that any person who uses a consumer credit report in connection with the approval of credit based on the application for an extension of credit, and who has received notification of a police report filed with a consumer credit reporting agency that the applicant has been a victim of aggravated identity theft, may not lend money or extend credit without taking reasonable steps to verify the consumer's identity and confirm that the application for an extension of credit is not the result of financial identity theft or aggravated identity theft. Adds that a consumer may place a security freeze on his or her credit report by making a request directly to the consumer credit reporting agency through a secure electronic mail connection, if an electronic mail connection is provided by the consumer credit reporting agency. Provides that a consumer credit reporting agency shall not charge a fee for placing, removing, or removing for a specific party or period of time a security freeze on a credit report, if the consumer submits to the credit reporting agency a valid copy of a police report, investigative report, or complaint that the consumer has filed with a law enforcement agency about unlawful use of his or her personal information by another person. Allows the credit reporting agency to charge a fee of not more than $10 to a consumer for each security freeze or temporary lift of a security freeze for a specific party and a fee of not more than $8 for removal of a security freeze or temporary lift of a security freeze for a period of time. Provides that the consumer credit reporting agency shall send a written confirmation of the security freeze to the consumer within 5 (instead of 10) business days of placing the freeze on the account. Requires the Director of the Division of Financial Institutions in the Department of Financial and Professional Regulation to promulgate rules necessary to allow the use of electronic media to receive and process a request from a consumer to temporarily lift a security freeze as quickly as possible, with the goal of processing a request within 15 minutes of that request. Defines "consumer", "consumer credit reporting agency", "credit report", "Director", and "security freeze". Changes references from "credit reporting agency" to "consumer credit reporting agency". Effective January 1, 2007.

A BILL FOR

AN ACT concerning business.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Consumer Fraud and Deceptive Business Practices Act is amended by changing Section 2MM as follows:

(815 ILCS 505/2MM)

Sec. 2MM. Verification of accuracy of credit reporting information used to extend consumers credit and security freeze on credit report for consumers identity theft victims.

(a) A credit card issuer who mails an offer or solicitation to apply for a credit card and who receives a completed application in response to the offer or solicitation which lists an address that is not substantially the same as the address on the offer or solicitation may not issue a credit card based on that application until reasonable steps have been taken to verify the applicant's change of address.

(b) Any person who uses a consumer credit report in connection with the approval of credit based on the application for an extension of credit, and who has received notification of a police report filed with a consumer credit reporting agency that the applicant has been a victim of financial identity theft, as defined in Section 16G-15 of the Criminal Code of 1961, or aggravated identity theft, as defined in Section 16G-20 of the Criminal Code of 1961, may not lend money or extend credit without taking reasonable steps to verify the consumer's identity and confirm that the application for an extension of credit is not the result of financial identity theft or aggravated identity theft.

(c) A consumer who has been the victim of identity theft may elect to place a security freeze on his or her credit report by:

(1) making a request in writing by certified mail to a consumer credit reporting agency; or

(2) making a request directly to the consumer credit reporting agency through a secure electronic mail connection, if an electronic mail connection is provided by the consumer credit reporting agency. with a valid copy of a police report, investigative report, or complaint that the consumer has filed with a law enforcement agency about unlawful use of his or her personal information by another person.

A consumer credit reporting agency shall not charge a fee for placing, removing, or removing for a specific party or period of time a security freeze on a credit report if the consumer submits to the credit reporting agency a valid copy of a police report, investigative report, or complaint that the consumer has filed with a law enforcement agency about unlawful use of his or her personal information by another person. The credit reporting agency may charge a fee of not more than $10 to a consumer for each security freeze or temporary lift of a security freeze for a specific party and a fee of not more than $8 for removal of a security freeze or temporary lift of a security freeze for a period of time. A security freeze shall prohibit, subject to the exceptions under subsection (i) of this Section, the consumer credit reporting agency from releasing the consumer's credit report or any information from it without the express authorization of the consumer. When a security freeze is in place, information from a consumer's credit report shall not be released to a third party without prior express authorization from the consumer. This subsection does not prevent a credit reporting agency from advising a third party that a security freeze is in effect with respect to the consumer's credit report.

(d) A consumer credit reporting agency shall place a security freeze on a consumer's credit report no later than 5 business days after receiving a written request from the consumer.

(e) The consumer credit reporting agency shall send a written confirmation of the security freeze to the consumer within 5 10 business days of placing the freeze and at the same time shall provide the consumer with a unique personal identification number or password, other than the consumer's Social Security number, 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.

(f) 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 credit reporting agency, request that the freeze be temporarily lifted, and provide the following:

(1) Proper identification;

(2) The unique personal identification number or password provided by the consumer credit reporting agency pursuant to subsection (e) of this Section; and

(3) The proper information regarding the third party who is to receive the credit report or the time period for which the report shall be available to users of the credit report.

(g) A consumer credit reporting agency shall 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 pursuant to subsection (f) in an expedited manner. The Director shall promulgate rules necessary to allow the use of electronic media to receive and process a request from a consumer to temporarily lift a security freeze pursuant to subsection (f) as quickly as possible, with the goal of processing a request within 15 minutes of that request.

(h) A consumer credit reporting agency that receives a request from a consumer to temporarily lift a freeze on a credit report pursuant to subsection (f), shall comply with the request no later than 3 business days after receiving the request.

(i) A consumer credit reporting agency shall remove or temporarily lift a freeze placed on a consumer's credit report only in the following cases:

(1) upon consumer request, pursuant to subsection (f) or subsection (l) of this Section; or

(2) if the consumer's credit report was frozen due to a material misrepresentation of fact by the consumer.

If a consumer credit reporting agency intends to remove a freeze upon a consumer's credit report pursuant to this subsection, the consumer credit reporting agency shall notify the consumer in writing prior to removing the freeze on the consumer's credit report.

(j) If a third party requests access to a 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.

(k) If a consumer requests a security freeze, the credit reporting agency shall disclose to the consumer the process of placing and temporarily lifting a security 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.

(l) A security freeze shall remain in place until the consumer requests that the security freeze be removed. A consumer credit reporting agency shall remove a security freeze within 3 business days of receiving a request for removal from the consumer, who provides both of the following:

(1) Proper identification; and

(2) The unique personal identification number or password provided by the consumer credit reporting agency.

(m) A consumer credit reporting agency shall require proper identification of the person making a request to place or remove a security freeze.

(n) The provisions of subsections (c) through (m) of this Section do not apply to the use of a consumer credit report by any of the following:

(1) 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.

(2) A subsidiary, affiliate, agent, assignee, or prospective assignee of a person or entity to whom access has been granted under subsection (f) of this Section for purposes of facilitating the extension of credit or other permissible use.

(3) Any state or local agency, law enforcement agency, trial court, or private collection agency acting pursuant to a court order, warrant, or subpoena.

(4) A child support agency acting pursuant to Title IV-D of the Social Security Act.

(5) The relevant state agency or its agents or assigns acting to investigate Medicaid fraud.

(6) 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.

(7) The use of credit information for the purposes of prescreening as provided for by the federal Fair Credit Reporting Act.

(8) Any person or entity administering a credit file monitoring subscription service to which the consumer has subscribed.

(9) 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.

(o) If a security freeze is in place, a consumer credit reporting agency shall not change any of the following official information in a credit report without sending a written confirmation of the change to the consumer within 30 days of the change being posted to the consumer's file: (i) name, (ii) date of birth, (iii) Social Security number, and (iv) 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.

(p) The following entities are not required to place a security freeze in a credit report, provided, however, that any person that is not required to place a security freeze on a credit report under paragraph (3) of this subsection, shall be subject to any security freeze placed on a credit report by another credit reporting agency from which it obtains information:

(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 payment.

(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.

(3) A credit reporting agency that:

(A) acts only to resell credit information by assembling and merging information contained in a database of one or more credit reporting agencies; and

(B) does not maintain a permanent database of credit information from which new credit reports are produced.

(q) For purposes of this Section:

"Consumer" means an individual who purchases products or services for personal use and not for manufacture or resale.

"Consumer credit reporting agency" means any person or entity that, 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 credit reports to third parties, and that uses any means or facility for the purpose of preparing or furnishing credit reports.

"Credit report" means any written, oral, or other communication of any information by a consumer credit reporting agency bearing on a consumer's credit worthiness, 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:

(1) credit or insurance to be used primarily for personal, family, or household purposes;

(2) employment purposes; or

(3) any other purpose authorized under this Act.

The term "credit report" does not include:

(A) any: (i) report containing information solely on transactions or experiences between the consumer and the person or entity making the report; (ii) communication of that information among persons or entities related by common ownership or affiliated by corporate control; or (iii) communication of other information among persons or entities related by common ownership or affiliated by corporate control, if it is clearly and conspicuously disclosed to the consumer that the information may be communicated among those persons or entities and the consumer is given the opportunity, before the time that the information is initially communicated, to direct that the information not be communicated among those persons or entities;

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

(C) any report in which a person or entity, who has been requested by a third party to make a specific extension of credit directly or indirectly to a consumer, conveys his decision with respect to that request, if the third party advises the consumer of the name and address of the person or entity to whom the request was made, and the person or entity makes the disclosures to the consumer required under the federal Fair Credit Reporting Act; or

(D) any communication excluded from the definition of consumer report pursuant to the federal Fair Credit Reporting Act.

"Director" means the Director of the Division of Financial Institutions in the Department of Financial and Professional Regulation.

"Extension of credit" does not include an increase in an existing open-end credit plan, as defined in Regulation Z of the Federal Reserve System (12 C.F.R. 226.2), or any change to or review of an existing credit account.

"Proper identification" means information generally deemed sufficient to identify a person. Only if the consumer is unable to reasonably identify himself or herself with the information described above, may a consumer credit reporting agency require additional information concerning the consumer's employment and personal or family history in order to verify his or her identity.

"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 credit reporting agency from releasing the report or any information from it without the express authorization of the consumer, but does not prevent a consumer credit reporting agency from advising a third party that a security freeze is in effect with respect to the credit report.

(r) Any person who violates this Section commits an unlawful practice within the meaning of this Act.

(Source: P.A. 93-195, eff. 1-1-04; 94-74, eff. 1-1-06.)

Section 99. Effective date. This Act takes effect January 1, 2007.