Numerous bills have been introduced by Congress with the aim of amending the FCRA. Additionally, on the state level, many lawmakers have joined the discussion by proposing new credit reporting legislation. The surge in state credit reporting legislation can be attributed to the interpretive rule issued by the Consumer Financial Protection Bureau in June 2022. This rule encouraged states to actively participate in the regulation of credit reporting. As we move into 2024, it is important to keep an eye on the following federal and state legislation, as they hold potential for passage or implementation.
Here is a list of federal and state legislation worth watching for passage or implementation in 2024:
Federal Legislative Activity
There have been multiple federal bills introduced in Congress that aim to amend the FCRA. If passed, the pending bills would:
Amend Section 604(c) of the FCRA to address the treatment of pre-screening report requests. Section 604(c) governs the furnishing of reports in connection with credit or insurance transactions that are not initiated by the consumer.[1]
Require that a consumer authorize the release of certain information. The bill would increase the consumers’ control over when and how their reports are released, and it would require verification of a consumer’s identity and the consumer’s permission before releasing reports in certain instances.
Amend the FCRA to require national credit reporting agencies to use a consumer’s current legal name on consumer reports, upon request.
Prohibit credit reporting agencies from issuing consumer reports containing information about debts related to medically necessary procedures.
Expand the definition of an active-duty military consumer for purposes of certain credit monitoring requirements.
Clarify provisions of the FCRA that relate to reporting certain positive consumer credit information to credit reporting agencies.
Prohibit COVID-19-related evictions from being included in a consumer credit report.
*******Note, however, that none of the aforementioned proposed federal laws have yet been passed.
State Legislative Activity
In 2023, various states have put forth legislative proposals concerning credit reporting. A number of states have introduced bills that aim to restrict the use of consumer reports for tenant screening purposes and evaluating creditworthiness.
In addition, certain states have presented legislation that would prevent employers from taking adverse actions based on an individual's consumer report or credit history. These bills also seek to prohibit employers from inquiring about an applicant or employee's consumer report or credit history.
For example, Connecticut's proposed legislation aims to safeguard consumers by ensuring that their credit score cannot be negatively impacted solely due to a background check. It also requires landlords to provide prospective tenants with a copy of any credit report obtained about them.
Illinois has introduced S.B. 1071, which seeks to amend the state's Consumer Fraud and Deceptive Business Practices Act. The proposed amendment would prohibit credit reporting agencies from providing consumer reports or contact information that is not specifically requested by the consumer in relation to inquiries about residential mortgage loans or automobile loans.
Maryland has introduced H.B. 994, a bill that would prohibit credit reporting agencies from including certain criminal records in consumer reports. This includes records related to criminal proceedings that resulted in exoneration, acquittal, a not guilty verdict, or expungement. The legislation also aims to prevent credit reporting agencies from using information from such criminal proceedings to assess a consumer's creditworthiness.
It is important to note that, similar to federal legislation, none of these state bills have been enacted at this time.
Conclusion
It is crucial for FCRA litigants and practitioners to stay updated on both federal and state legislation that is currently pending. This is because if these legislations are passed or implemented, they could bring about significant changes to the FCRA landscape. As a result, regulated entities and practitioners would need to adapt their FCRA practices in order to comply with any new laws that may be introduced.
The CFPB's stance on state credit reporting legislation will also have an impact on the volume of such laws. The CFPB believes that states have the authority to enforce stricter credit reporting laws, and these laws are generally not overridden by the FCRA. While many states already have their own credit reporting laws, it is expected that there will be a rise in state legislation that imposes stricter regulations on credit reporting practices in the latter half of the year.
Given the anticipated increase in state-level credit reporting laws, it is essential for regulated entities and practitioners to stay informed about any developments in their respective states. This is because these developments could potentially affect their credit reporting obligations. By staying aware of the changes and requirements imposed by state legislations, regulated entities and practitioners can ensure that they are in compliance with all relevant laws and regulations.
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